Lukashenko says he may quit as president
Belarus hits EU with tit-for-tat sanctions
Belarusian police introduce colour-coded torture system for detained protesters
Kremlin publicly condemns Belarusian police brutality in hint of growing frustration with Lukashenko
Russian services PMI rises to 48.2, but remains underwater as recovery continues to slow
Russia to start mass vaccinations on December 7
Azerbaijan’s Aliyev calls on Armenia, Russia, Turkey and Iran to assist in creating Nakhchivan land corridor
FPRI BMB Russia: Sberbank releases a three-year transformation strategy to e-commerce concern
Ukraine’s banking sector continues recovery, but profits still lagging last year
Ukraine’s real wages up over 10% in October but have been stagnant in dollar terms for almost a year
FPRI BMB Ukraine: Public has confused opinions on resolving the Donbas conflict
Western Balkans plus Ukraine subsidised coal with over €900mn in 2018-2019
Estonian parcel robot firm Cleveron eyes €30mn state loan
Estonia’s chief auditor says €1bn in state COVID-19 loans issued haphazardly
Economic sentiment in CEE falls in November as recovery momentum splutters
Estonian animation studio Imepilt to hold IPO
Brighter days ahead: The economic bounce back in 2021
Central, Southeast Europe stock markets jump in anticipation of COVID-free future
VISEGRAD BLOG: An easing of trade tensions but still an uncertain situation for export-oriented Central Europe
Hungary's PM risks isolation as Poland mulls dropping EU budget veto
Poland ready to back down from veto of EU budget
Hungary's ruling party in damage control mode after MEP sex scandal bombshell
Poland’s PMI remains stuck just above the improvement line at 50.8 in November
Czech companies dominate this year’s Deloitte Technology Fast 50 CE
Coronacrisis to get worse before it gets better forecasts wiiw
EU diplomats say no chance of Bulgaria removing veto for Skopje to start EU accession talks
IMF says downside risks to Albanian economy are increasing
EU ministers fail to agree on launch of accession talks with Albania and North Macedonia
Western Balkans commit to green agenda and regional common market at Sofia summit
Bosnia’s opposition ousts nationalist parties in major cities
Bosnia’s main ethnic parties fight to hold onto power in local elections
Southeast Europe’s EU members to get biggest boost from next budget and recovery funds
Bulgaria imposes 3-week lockdown to slow down COVID-19 spread
CEE politicians highlight trade and security ties as they congratulate Biden
Breakaway Transnistria fully under Sheriff’s control as Obnovlenie party sweeps board in parliament election
Moldova’s presidential election is over, now the battle for the parliament begins
Moldova’s foreign policy reset
Russian establishment quick to congratulate Moldova's new president-elect
Rising COVID-19 cases put intense pressure on CEE healthcare systems
MEPs urge European Commission to act against Hungarian media financing in North Macedonia and Slovenia
North Macedonia mulls decriminalising cannabis to boost tourism
Retail surpass pre-crisis peak as Romanians shop instead of holiday
Romania’s stability election
Romanian venture capital firm Catalyst launches new €40mn-50mn fund for TMT
The state is back in business
Slovenian PM Jansa stands alongside Hungary and Poland in EU rule of law row
BEYOND THE BOSPORUS: Turkish number crunchers deliver November inflation surprise of 14%
Erdogan needs to go says analyst assessing Turkey’s economic collapse
Ukraine strikes deal with Turkey to produce killer drones instrumental in Karabakh conflict
In Karabakh deal, as many questions as answers
Protesters flood Yerevan demanding Armenia’s “traitor” PM quit over Nagorno-Karabakh surrender
Who emerge as the real winners from the bloody Nagorno-Karabakh conflict?
Below average 2020 wine production destined for volatile and uncertain global market
Iran calls on Saudis to limit $67bn defence spending to Tehran’s $10bn
Iranian prosecutors pledge to pursue Trump for Soleimani killing even after he leaves White House
No reaction from Kazakh elites as bombshell FT report says Nazarbayev’s son in law siphoned millions from pipeline scheme
UK court freezes $5bn in assets connected to fugitive Kazakh banker Ablyazov
Attack of the Debt Tsunami: global debt soars to a new all-time high
Kyrgyzstan's proposed new constitution provokes widespread revulsion
Kyrgyzstan's China debt: Between crowdfunding and austerity
CFC joins RWC in assessing KAZ Minerals buyout offer as under-valuation
China business briefing: Not happy with Kyrgyzstan
Mongolian coal exports to China paralysed as Beijing demands virus testing of truck drivers
Mongolia fears economic damage as country faces up to its first local transmissions of coronavirus
Mongolia in lockdown after suffering first local coronavirus transmissions
Mongolia’s wrestling culture: From the grasslands to the cage
No surprises in Tajikistan as Rahmon retains presidency with 91% of vote
A Tajikistan poised on verge of economic calamity set for vote
Tajikistan revives on-off dispute with Iran
Turkmenistan: The dammed united
Turkmenistan: Everybody yurts, sometimes
Dirty money investigation reviews identified payments worth $1.4bn linked to Turkmenistan
Uzbekistan unveils extensive privatisation programme
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This is the first in a series of articles featuring heatmaps of the main macroeconomic indicators that allow direct comparisons between the countries of New Europe. They are part of a package that includes bne IntelliNews’ OUTLOOK 2019, detailed country reports looking at the prospects for 2019 in each of the countries we cover. See a complete list of the OUTLOOK reports here. In addition, bne IntelliNews publishes detailed monthly country reports on a selection of the most important countries in our patch. See the OUTLOOK country list page for more information.
Sky high inflation has been the bane of emerging Europe for most of the last two and half decades. The beast has been slain in almost all of the countries of the region, but if you combine this result with the level of central bank policy rates then it is clear some countries are still in the battle to contain price rises.
The first in a series of heatmaps from bne IntelliNews, the consumer price inflation (CPI) heatmap shows that inflation is in single figures for almost all the countries in the region.
The problem children in the region that are still battling high inflation are Turkey and Iran, which are both in the midst of economic crises – the former self inflicted and the latter due to new US sanctions.
The real success story has been Ukraine, which is recovering from an almost total collapse of its economy in 2015. Encouragingly the heatmap shows that inflation fell to 10% as 2018 came to an end from over 60% in April 2015. The National Bank of Ukraine (NBU) has shown real backbone and made growth-killing rate hikes three times in 2018, putting controlling inflation above stimulating spluttering growth. As a result it has delivered stability and burnished its reputation for independence in the process that will pay off soon when the country goes back to the bond markets in 2019.
With a few exceptions, almost all of the other countries in the region have inflation at 3% or lower.
Monetary policy rates too high
However, this low inflation has come at the price of keeping interest rates high in many countries, which is clear from the second heatmap and shows the region is still a two track tale.
In general the economies of Central and Southeast Europe have also managed to keep central bank monetary policy rates low, whereas in Eastern Europe and Central Asia the fight against inflation is clearly still in full swing as central banks in those regions have been keeping the cost of borrowing high.
Again Turkey and Iran stand out in the heatmap as having very high rates as they deal with the aftershocks from their crises, but Ukraine is also in the red and rates rose somewhat from 16% to 18% over 2018 as the NBU struggled to control strong inflationary pressures.
In almost all of the other countries the trend was of falling rates, or in a few cases the upward adjustments were minor, except Russia, which started 2018 with another rate cut in a series of constant cuts over the last four years. However, the easing cycle in Russia came to an end in September when the Central Bank of Russia (CBR) unexpectedly hiked rates in a preemptive move that anticipated new “crushing” sanctions from the US in 2019. That will hurt Russia’s growth story, but the state is more concerned with defending itself from external shocks at the moment than it is with leveraging its otherwise strong macro position to boost growth.
Buying on the Never Never
So digging a little deeper the picture is more nuanced than a cursory glance at the CPI numbers might suggest. bne IntelliNews made a simple “Never Never” index that combines the changing cost of buying with the changing cost of borrowing by adding the CPI rates to the key policy interest rates to highlight the differences.
In an ideal world the Never Never index should be around 4% (CPI of 2% plus overnight rates of 2%) and the progress most of Central Europe has made since it joined the EU is immediately apparent as nearly all the countries in that region have a Never Never index of 4% or less.
Again Turkey and Iran stand out, but the picture in Southeast Europe is far more mixed; almost none of the countries of the Balkans have excessively high Never Never index numbers, but Romania and Moldova are the two exceptions.
All the countries of Eastern Europe and Central Asia clearly have a lot more work to do to bring their Never Never index numbers down by at least half in most cases, or even more.
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