Review
-
On Friday we published our New Europe Weekly.
-
Estonian October inflation declined to -2.2% y/y, close to expectations. We had expected deflation of 2.0% y/y. The 12-month average inflation drops to 1.5% y/y. Thus the Maastricht inflation criterion is almost fulfilled. We expect the deflationary trend in Estonia to continue further and look for average CPI of around -0.1% for 2009 and -0.7% for 2010.
-
The Lithuanian central bank (LB) announced an update of its macro forecasts. LB is in line with our analysis on latest GDP developments and noted that current “data should be assessed cautiously”. According to the report “the GDP deflator changes were not in line with the developments of producer, consumer and other prices” and “other macroeconomic indicators also do not show a more apparent recovery”. Due to better GDP data and some improvement in confidence in the economy, LB revised its GDP growth forecast upward for 2009 (to -15.2% y/y) and 2010 (-1.5% y/y).
Preview
- October inflation data is due for release in Czech Republic, Lithuania and Latvia. We expect to see deflation in both the Czech Republic and Latvia. Look out for Latvian Q3 GDP data, scheduled for release at noon.
Trading update
- EMEA market sentiment was overall positive on Friday. Most currencies in the region posted decent gains over the trading session despite disappointing labour data out of the US. In fixed income markets, rates were lower in both Turkey, South Africa and Russia. Russian rates fell as markets opened and the move was supported by comments from deputy Economy Minister who forecast end-2009 inflation as low as 9.0% y/y. Over the day, the mood changed a little following weak payrolls from US.
