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CEE Biweekly

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Some slowdown, but economic growth still sound

Thu, May 29 2008, 08:02 GMT
by Yapi Kredi Bank Economic Research Department

Yapi Kredi Bank

This issue includes:

• - key economic news
• - a feature on financial markets
• - a country monitoring about Turkey
• - tables with two-week market movers and risk factors, nterest and exchange rates, ratings and monthly indicators.
  

Preliminary GDP data for Q1 2008 have been released by the statistical offices of Slovakia, Czech Republic, Hungary and the Baltic countries last week, anticipating, from one side, and confirming, from the other, our original prediction of a slowdown in economic growth in the Central and Eastern Europe (CEE) region as a whole in 2008.

However, as indicated by recently released GDP data of some Western Europe countries – particularly Germany and France, which recorded better than expected economic growth in Q1 2008 – the CEE region also is maintaining sound economic growth, proving to be not yet directly influenced by the US slowdown.

It is worthwhile, however, to make a distinction among countries. If on the one hand Central Europe countries – Slovakia, Czech Republic and Hungary – surprised on the upside, with GDP growth in Q1 proving to be higher than the market’s and/or our expectations, on the other hand the Baltic economies, in particular Estonia and Latvia, recorded a marked slowdown.

The Slovak economy turned out to be the fastest growing economy, not only among the CEE countries, but also in the European Union, expanding by 8.7 % yoy (which was above the market expectation of 8.5 % and our original forecast of 7.5 %). The Statistical Office will publish the structure of growth on June 3rd. In addition to the usual positive contribution from net exports, however, households consumption is assumed to have been the key driver of this dynamic (also taking into account the record growth in retail sales in the first quarter).

• Download full CEE-Biweekly with charts

Published on  Thu, May 29 2008, 08:13 GMT