Yesterday we received PMI data for June across the EMEA region. Even though the PMI index has ticked up in all EMEA countries, it nonetheless remains – with the exception of Turkey – below the important 50 mark. Read our comment here.
PMI was released also in South Africa. As in the other EMEA countries, the South African PMI rose in June but the increase to 37.9, up from 37.3 in May was only moderate remaining far from the critical 50-level.
Yesterday, the Latvian Prime Minister Valdis Dombrovskis said in a TV interview that the Latvia government will start working the 2010 budget in the coming weeks but he doesn’t expect “any mass salary cuts” next year, after the 20% reduction that was made this year. PM Dombrovskis furthermore said that GDP would drop again in 2010, but the GDP drop would be much less in 2010 – 4% y/y – than in 2009.
Yesterday, the South African Finance Minister Pravin Gordhan said that the global growth rates are worrisome for the South African economy with revenues collection in the first three months this year falling considerably. FM Gordhan expects economic recovery later this year but that it will be slow. He furthermore said that South Africa should return to fiscal consolidation when the recession is over.
Czech President Vaclav Klaus called a parliamentary election for October 9-10. In Croatia, the Prime Minister Ivo Sanader resigned and at the same time withdraws from active politics.
Preview
Estonian industrial production is due for release today. We expect only a marginal improvement in May’s industrial production to -29.7% y/y from -33.7% y/y in April.
South African vehicle sales for June will undoubtedly remain deep in the red.
Trading update
Rising risk appetite sent most of the CEE currencies stronger yesterday with the Polish zloty outperforming its regional peers. Due to the lack of domestic news from the region, the EMEA currencies will likely continue to be driven by the risk appetite.
Even though the CZK has gained almost 5% over the past three months, the Czech central bank governor Tuma said that current CZK level helps economic recovery, as it is well below its record highs seen in late-2008. His comments clearly indicate that recent CZK gains are not problematic for the CNB and therefore the current CZK level would not be a decisive element in monetary policy decision if current levels remain.
