INTERVIEW: “The weekend’s protests were the Russian peoples’, not the opposition’s” – Maxim Reznik
Western Balkans citizens legally resident in EU equal to 14% of region’s population
International Ice Hockey Federation (IIHF) has stripped Belarus of the right to hold the World Championship this year
Alexei Navalny arrested on arrival as he returns home
Russia's NorNickel adopts blockchain for supply chain management
Russia goes ahead with eSIM technology
Russia's retailer X5 Group posts 13% sales growth in 4Q20
National Bank of Ukraine retains a key policy rate at 6%, the outlook of the CPI deteriorates
Western Balkans and Ukraine urged to scrutinise coal subsidies
Oligarchs trying to derail Ukraine’s privatisation programme, warns the head of Ukraine’s State Property Fund
VISEGRAD BLOG: Central Europe's populists need a new strategy for Biden
LONG READ: The oligarch problem
OUTLOOK 2021 Lithuania
EBRD says loan to Estonia’s controversial Porto Franco project was never disbursed
Czech MPs pass protectionist food law in violation of EU rules
M&A in Central and Eastern Europe fell 16% in value in 2020, says CMS report
Hungarian vehicle makers hit by supply chain shortage
COVID-19 and Trump’s indifference helped human rights abusers in 2020
Polish industrial production continues boom in December
OUTLOOK 2021 Poland
OUTLOOK 2021 Slovakia
BRICKS & MORTAR: Rosier future beckons for CEE retailers after year of change and disruption
FDI inflows to CEE down 58% in 1H20 but rebound expected
Pandemic pushes public debt close to 80% of GDP in Albania and Montenegro
BALKAN BLOG: Superstition and resentment surround vaccination plans
Albania needs reforms for e-commerce to thrive, says World Bank
Bosnia's exports in 2020 amounted to BAM10.5bn, trade deficit to BAM6.3bn
Retailers and restaurant owners threaten protests in Bulgaria if reopening is delayed
Bulgaria's Biodit first company to IPO on new BEAM market
Bulgaria’s government considers gradual easing of COVID-related restrictions
Spring lockdown caused spike in online transactions in Croatia
ING: Growth in the Balkans: from zero to hero again?
Labour demand down 28% y/y in Croatia in 2020
Kosovo’s biggest opposition party risks being unable to run in general election
OUTLOOK 2021 Moldova
Storming parliaments: New Europe's greatest hits
World Bank revises projection for Moldova’s 2020 GDP decline to 7.2%
Montenegro’s special prosecution probes finance minister over €750mn Eurobond issue
North Macedonia plans to cut personal income tax in IT sector to zero in 2023
Romania government to pursue “ambitious” timetable for justice reforms
Private finance mobilised by development banks up 9% to $175bn in 2019
OUTLOOK 2021 Romania
BALKAN BLOG: US approach to switch from quick-fix dealmaking to experience and cooperation
Slovenia’s economic sentiment indicator up 2.2 pp m/m in January
Slovenia lost €10bn by neglecting wood industry for decades
OUTLOOK 2021 Slovenia
Slovenia’s opposition files no-confidence motion against Jansa cabinet
D’S Damat franchise deals ‘show Turkey’s hard-pressed mall operators becoming their own tenants’
Turkey’s benchmark rate held as concerns over faltering recovery come to fore
Turkish lira breaches HSBC’s stop-loss, Turkey ETF signalling outflows
CAUCASUS BLOG : What can Biden offer the Caucasus and Stans, all but forgotten about by Trump?
Armenia ‘to extend life of its 1970s Metsamor nuclear power plant after 2026’
OUTLOOK 2021 Armenia
OUTLOOK 2021 Azerbaijan
OUTLOOK 2021 Georgia
Iran’s President Khamenei menaces private citizen Trump
Iran’s technology minister indicted for failing to properly implement internet censorship
No US move to rejoin Iran nuclear deal imminent, say Biden national security nominees
TEHRAN BLOG: Will Biden bet on a quick return to the Iran nuclear deal?
Central Asia vaccination plans underwhelm, but governments look unruffled
Fears of authoritarianism as Kyrgyz populist wins landslide and backing for ‘Khanstitution’
Mongolia, island of democracy
OUTLOOK 2021 Mongolia
Mongolia's PM quits amid protests over treatment of mother with coronavirus and newborn baby
Mongolia's winter dzud set to be one of most extreme on record says Red Cross
OUTLOOK 2021 Tajikistan
OUTLOOK 2021 Turkmenistan
Turkmenistan: How the Grinch stole New Year
COMMENT: Uzbekistan is being transformed, but where are the democratic reforms?
Download the pdf version
The Institute of International Finance (IIF) has released updated forecasts for economic growth this year for the Central and Eastern Europe (CEE) countries that show a sharp slowdown in 2020 and all except Turkey will return negative results.
Economists have been scrambling to assess the impact of the double whammy of the oil price collapse and the stop shock caused by the spreading coronavirus (COVID-19) pandemic in Europe.
Given its dependence on exports to the Euro area, CEE is particularly vulnerable to contagion effects – the economic, not medical, sort – caused by the big economies in Western Europe slowing. The regional slowdown amongst the EU members means that no one is safe and all countries will be affected.
“CEE will be heavily affected by the large output contraction in the currency union (4.7%). As a result, the CEE-4 — Czech Republic, Hungary, Poland and Romania — are projected to experience GDP declines ranging from 2.5% to 3% in 2020,” Elina Ribakova, deputy chief economist for the Institute of International Finance (IIF), said in a note co-authored by economists Ugras Ulku and Benjamin Hilgenstock.
Germany remains the powerhouse of Europe, but its widely followed Ifo business index just put in the sharpest month-on-month contraction on record, dropping from 96 in February to 86.1 in March. The lowest the index has fallen to is 80.7 in December 2008 during the financial crisis.
“Another dramatic plunge. It should not come as a surprise to anyone, but economic data for March and beyond will be horrible and probably even beyond the traditional meaning of horrible. All Western economies are facing an unprecedented crisis. Recession is not even the right word for an almost complete standstill of entire economies, almost overnight. Germany is no exception,” says Carsten Brzeski, an economist with ING.
Most of the economic data available at the moment related to February before the worst of the crash started and was largely normal. “The outlook for the rest of the year will be challenging,” says Ribakova.
But Ribakova went to say that this crisis remains a public health crisis so far and not a financial crisis, and so the danger of the crisis spilling over into the financial sector remains limited for the time being.
“Financial sector vulnerability is markedly lower compared to the global financial crisis [of 2008],” says Ribakova, adding some caveats.
“In Ukraine, we worry about the possibility of a deeper crisis. Recent news of progress in IMF programme negotiations [is] encouraging, as market access is likely to be significantly curtailed in coming quarters,” according to Ribakova.
Ukraine has just announced that the text of a draft law on banking has been agreed with the IMF at the weekend and has just been submitted by the Cabinet of Ministers to the Rada. The law, if passed, will clear the way for Kyiv to sign off on a new $5.5bn Extended Fund Facility (EFF) deal with the IMF that will give the country badly needed access to cheap funds to stave off a meltdown. Analysts in Kyiv expect the law to be voted on this weekend.
Russia’s strong macro-fundamentals and massive reserves will insulate it from the worst of the storms, but it will not escape unscathed either. The official forecast for 1.9% growth this year has clearly already gone out the window.
“We expect Russia’s economy to contract by 1.3% this year, less than in previous crises (8% in 2009 and 2% in 2015),” says Ribakova.
And Russia’s crisis response so far as been extremely mild in comparison to the drastic measures forced on it during the last oil price shock in 2014.
“In 2014, the CBR was forced to hike rates aggressively (by 900bps), while in March 2009, money supply growth contracted by 11% year on year. Today, the flexible ruble, central bank credibility and significant macroeconomic buffers should help insulate the real economy. Russia’s fiscal policy response is still modest but will need to be stepped up. The possibility of a deeper COVID-19-induced crisis is high, as Russia’s healthcare system is poorly prepared for a pandemic — especially in the regions and following years of expenditure cuts,” according to Ribakova.
Turkey seems to have lucked out. Growth momentum in Turkey was gaining significant speed in early 2020, with high-frequency indicators such as bank lending pointing to a very strong growth performance in Q1.
“Thanks to this recent credit push, Turkey entered the COVID-19 shock with strong momentum, which will likely keep full-year growth positive, despite an estimated sharp output contraction in Q2. It remains to be seen if the government’s recent decision to double the Credit Guarantee Fund’s (CGF) capital to TRY50bn [€7.1bn] (as part of a sizable stimulus package) will be sufficient to maintain banks’ ongoing risk-on attitude so that they continue to provide robust credit growth. This should at least partially offset COVID-19 headwinds to economic activity,” says Ribakova.
here to continue reading this article
and 5 more for free or purchase
12 months full website access including
the bne Magazine for just $250/year.
Register to read the bne monthly magazine for
Password could contain only
and have 8-20 symbols length.
Please complete your registration by confirming your
A confirmation email has been sent to the email
address you provided.
can't be empty.
No user with
this email address.
Access recovery request has expired, or you are using
the wrong recovery token. Please, try again.
Access recover request has expired.
Please, try again.
To continue viewing our content you need to complete
the registration process.
Please look for an email that was sent to
with the subject line
"Confirmation bne IntelliNews access". This email will have
instructions on how to complete registration
process. Please check in your "Junk" folder in
case this communication was misdirected in your
If you have any questions please contact us at firstname.lastname@example.org
Sorry, but you have used all your free articles fro
this month for bne IntelliNews. Subscribe
to continue reading for only $119 per year.
Your subscription includes:
For the meantime we are also offering a free
digital weekly newspaper to subscribers to
the online package.
Click here for more subscription options,
including to the print version of our
flagship monthly magazine:
Take a trial to our premium daily news
service aimed at professional investors that
covers the 30 countries of emerging
For any other enquiries about our
products or corporate discounts please
contact us at
If you no longer wish to receive
Magazine annual print
Website & Archive
Combined package: web
access & magazine print
Take a trial to our premium daily news service
aimed at professional investors that
covers the 30 countries of emerging Europe: