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Global Ou utlook – 25 November 2015 2
Emerrging Eu urope – Growth G set to retu urn in 20 016 Peter de Bruin Sen nior Economist Tel:: +31 20 343 5619 9
Folllowing a dee ep contraction, Russia should grow w modestly y next year,… … …w while central European economies e continue c to expand rob bustly Not much scop pe for accele eration in Tu urkey’s econ nomic grow wth
pete er.de.bruinl@nl.ab bnamro.com
action in Rus ssia, but CE EE fared welll Contra Develop pments in emerrging Europe played out quite e differently thaan we had expe ected last year. While we e had thought tthat Russia’s economy e would d stagnate, the deep slide in the t ruble on the e back of a drop in oil priices led to a ba anking crisis at the end of 20114, prompting the t central ban nk to raise rates to a stagg gering 17%. Th he subsequentt recession is liikely to have le ed to a 4% n addition, the Russian-Ukrainian conflict haas had a signifficantly deeper contraction in output. In o the Ukrainia n economy, wiith the latter ex xpected to havee shrunk by about one-tenth this t impact on year. In contrast, centrral European ec conomies did, on balance, sliightly better tha an we had ed a robust rec covery, helped in part by an aaccelerating eu urozone econom my. anticipatted. They stage There were few surprisses in Turkey’s s performance, with average ggrowth likely to o come in at 3% % this yearr, roughly the ssame pace as last year. Still, the developmeents in Russia and a Ukraine dragged the average g growth rate of th he entire region into negativee territory, mark king the first contraction since the g great recession.
First contraction c s since the grea at recession % yoy, Emerging E Europee average GDP
10 8 6 4 2 0 -2 -4 -6 -8 -10 7 07
08
09
10
11
12
13
14
15
Source: Thomson Reuters D conomics Datastream, ABN AMRO Group Ec
Russia a and Ukrain ne are out off recession… … The goo od news is that Russia’s economy is showing tentative signns of stabilising g. The central bank has s lowered ratess to 11%, while e consumers and firms have aadjusted their spending s patte erns to the sp pike in inflation that resulted from f the deep slide s in the rub le. In the third quarter, the economy y shrank by 4.1 1% compared to a year ago, down from a 44.6% contractio on in Q2. Accordin ng to our estim ates, this trans slates into an 0.2% 0 expansionn compared to the second quarter. This implies th hat Russia’s rec cession has en nded. That saidd, despite the lo oosening of the e central bank, b financial conditions rem main tight. The EU/US sanctioons will also continue to weigh h on the econ nomy, as will lo ow oil prices. Finally, the econ nomy is in needd of structural reforms. r Growtth in 2016 is therefore t expe cted to be very y modest, at be est. In Ukraine,, helped by a cease-fire c in the e East of the t country, the e economy gre ew by 0.7% in third quarter froom the second quarter, implyiing that the recession ende ed here too. Ho owever, the ou utlook for Ukrai ne remains dim m as well.
…while e economie s in Centrall Europe sho ould continu ue to propel ahead… Meanwh hile, closer to h ome, the economies in Centrral Europe, succh as Poland, the t Czech Republic c and Hungary , should contin nue to propel ah head. These ecconomies are benefiting from ma