News
KZ: Positive – 2Q GDP grows 7.1% yoy (p2)
PL: Mixed – July Wages come is at 5.2%, employment – at 3.3% yoy (p2)
Today’s Events
HU: HUF50bn12M tbill auction/KZT: KZT14bn 2026 GB auction/LV: 2Q Unemployment/PL: July PPI, July IndOut/RO: RON600mn 2014 ROMGB auction/RU: International Reserves as of Aug, 12
EEMEA Markets
The Russian economy, at least to date, appears to be weathering the global storm well. Activity indicators released on Monday showed an acceleration in investment growth following 1Q’s slump. At 7.9% yoy in July, investment posted its highest growth rate YTD, reflecting the fading impact of this January’s hike in social security contributions and an increase in the pace of new credit extension by the domestic banking sector. Meanwhile, industrial production has held up better than what the manufacturing PMI data would suggest, posting mom gains (SA) in each of the 5 months to July.
The consumer is also more than holding its own. While still well off its pre-crisis highs, retail sales remains relatively robust at 5.6% yoy. There are also signs that lower inflation is boosting real consumer purchasing power. Real disposable income growth posted its second consecutive month of positive yoy growth (0.6% yoy), following three months of contraction. Real wage growth accelerated to 3.8% yoy in July, its fastest pace of growth this year. The pace of decline in unemployment is easing, with unemployment down 0.5pp in July relative to Jul-10 but at 6.5% unemployment has already fallen significantly.
Focusing more on inflation, for the second week in three consumer prices fell in wow terms by 0.1%. Russia is clearly seeing the impact of this year’s better harvest, helping significantly lower inflation pressures. From a peak of 9.6% yoy in May, inflation eased to 9.0% in July and should decline to close to 8.0% yoy in August. It is not only exogenous factors such as food prices which are at play. The CBR currently also has monetary factors in their favor with M0 growth slumping and M2 following.
Outside of the release of Polish industrial production and PPI for July on Thursday, the data calendar in CEE is very light. In terms of publications, please take a look at a note we published yesterday on Slovakia, named ‘Slovakia: A diamond in the rough’, discussing some of the positive preemptive measures that Slovakia has taken within EMU to address fiscal excesses and competitiveness concerns.
Click here to read the full report:
http://www.easyforexnews.net/wp-content/uploads/2011/08/eed_fi_180811_0000.pdf
Gillian Edgeworth
UniCredit Research