20131030-巴黎银行证券-CEEMEAnomics_19页_824kb

CEEMEA Weekly Summary - 30 October 2013

Core Content Overview

This week's CEEMEA Weekly report highlights key economic and political developments across Central and Eastern Europe and the Middle East. The focus is on the implications of recent elections, central bank policy decisions, inflation trends, and political dynamics in key countries such as the Czech Republic, Poland, South Africa, and Turkey.

Main Themes and Key Information

1. Czech Republic: Post-election Stalemate

• The parliamentary elections failed to produce a clear winner, with left-wing parties receiving less than expected votes.
• The Social Democrats (CSSD) and Communists secured 20.5% and 15% of the vote, respectively, giving them 50 and 33 seats in a 200-seat lower house.
• The ANO party, led by Andrej Babis, emerged as the kingmaker with 47 seats.
• A minority government led by the Social Democrats or a technocratic administration may be formed, but both are unlikely to last the full four-year term.
• Political tensions within the Social Democrats and uncertainty over the fiscal outlook could lead to further elections.
• The risk of FX intervention by the Czech National Bank (CNB) remains due to unclear fiscal plans.

2. Poland: Central Bank CPI Projections and Policy Guidance

• The Polish National Bank (NBP) is expected to keep interest rates unchanged at its 6 November meeting.
• The central bank is likely to extend forward guidance of stable rates to mid-2014.
• Inflation is projected to rise in early 2014 due to base effects and higher excise duties, but will remain below the 2.5% target.
• The output gap is expected to narrow in 2014-15, with GDP growth projected to increase.
• The NBP is cautious about premature policy tightening due to downside risks in global and domestic economic conditions.

3. South Africa: Political Splits and Economic Struggles

• Transnet and BHP Billiton: Disagreements over Black Economic Empowerment (BEE) policies intensified, with Transnet CEO Brian Molefe criticizing BHP Billiton's access to the Richards Bay Coal Terminal (RBCT).
• Democratic Alliance (DA): Internal power struggles are becoming a national issue, with Mmusi Maimane and Lindiwe Mazibuko vying for leadership roles.
• COSATU: The union faces internal divisions, with SADTU opposing NUMSA and the ANC. A potential split threatens the stability of the ruling alliance.
• Economic Outlook: The country's trade deficit and high unemployment remain major concerns. Manufacturing activity is expected to improve slightly in October, but industrial production may decline in September.
• PMI and GDP: The PMI and manufacturing data are expected to be mixed, with possible negative industrial production growth in Q3.

4. Turkey: Decline in Potential Growth

• Based on historical productivity data, Turkey's potential GDP growth for 2013-17 is estimated between 3.3% and 4.1%.
• Total factor productivity (TFP) has declined significantly since 2007-12, contributing to slower economic growth and a rising current-account deficit.
• The Turkish Central Bank (CBRT) is expected to maintain stable interest rates until the end of 2013.
• Inflation is forecast to remain high, with a monthly CPI rate of 1.6% for October and an annual rate of 7.5%, though core inflation is expected to stay elevated.
• The PMI is likely to remain resilient, supported by strong capacity utilization data.

Key Policy and Market Outlook

• Czech Republic: The lack of clarity on fiscal policy increases the risk of FX intervention by the CNB.
• Poland: The NBP will likely maintain stable rates through mid-2014, with no immediate tightening due to inflation remaining below target.
• South Africa: Political instability and internal union conflicts may affect economic performance and policy implementation.
• Turkey: A decline in TFP growth is a key concern, and the CBRT will need to monitor inflation closely, especially with core inflation remaining high.

Economic Data Highlights

• Czech Republic: Expect a 2-3 month delay in forming a new government, with uncertainty over fiscal policy affecting FX markets.
• Poland: Economic projections suggest a rebound in GDP and inflation, but the NBP will likely "look through" short-term inflation spikes.
• South Africa: Mixed data releases expected, with potential negative impacts from strikes and a weak industrial production outlook.
• Turkey: Inflation is expected to remain high in October, but annual inflation may decline due to base effects. Core inflation is projected to stay elevated.

Summary of Key Developments

• Czech Republic: No clear election winner, leading to political uncertainty and potential short-lived governments.
• Poland: NBP to maintain stable rates through mid-2014, with inflation expected to rise but remain below target.
• South Africa: Political tensions and union splits threaten economic stability, with ongoing disputes over BEE and labor policies.
• Turkey: Potential growth is expected to slow due to declining TFP, with inflation remaining a challenge despite base effects.

Forward Guidance and Policy Expectations

• Czech Republic: CNB may intervene in FX markets due to fiscal uncertainty.
• Poland: NBP will likely extend forward guidance to mid-2014, with no immediate rate changes.
• South Africa: Continued focus on BEE policies and internal union dynamics.
• Turkey: CBRT is expected to keep rates constant through 2013, with potential easing in early 2014 if inflation pressures persist.

Conclusion

The CEEMEA region faces a mix of political and economic challenges, with uncertain governance in the Czech Republic, inflationary pressures in Poland and Turkey, and internal conflicts in South Africa. Central banks are expected to maintain stability in monetary policy, with the NBP and CBRT showing a cautious approach. Political dynamics, particularly in South Africa and Turkey, will play a crucial role in shaping future economic outcomes.