Review
-
As we expected, deflationary pressure in Estonian eased somewhat with inflation in February decelerating by -0.1% y/y up from -0.7% y/y in January. This was mainly influenced by higher clothing and footwear prices (end of seasonal sales) and higher transportation costs.
-
Estonia’s finance ministry lowered its estimate for the 2009 budget deficit to 1.7% of GDP, saying the European Union requirements had clearly succeeded. However, the significant part of these improvements are due to one-off revenues. Even if those revenues correspond to ESA95 regulation it will undoubtedly raise questions about the sustainability of Estonian public finance. On the other hand, other fiscal measures that have been taken in Estonia during the really exceptional economic situation demonstrated the country’s ability to keep fiscal development under control, even in such a difficult macroeconomic environment.
Preview
-
Latvian and Lithuanian inflation will be published today. We expect Lithuania CPI in February to stand at 0.0% y/y compared with -0.1% y/y in January. Latvian CPI should decelerate further to -4.1% y/y from -3.1% y/y in February.
-
We expect the Turkish industrial production drop to 19.7% y/y in January, down from December’s 25.2% y/y.
Trading update
- For the past two weeks we have recommended buying PLN/HUF based on our EMEA FX Scorecard. The trade was a success. Going into this week, based on our EMEA FX Scorecard, the PLN is the highest scoring currency but now TRY is the lowest scoring of the five currencies and we now recommend buying PLN/TRY.
