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4d1f67fd85d66cd59464faa9b121f111703ed396e1cc191ceb847fb9f91fdbce;;[{"layout":"detailed","uid":2684,"publicationDate":"26 Mar 24","emaObject":{"protectedFileLink":"https:\/\/\/DocsKey\/emergingmarkets_docs_2024_186322.ashx?EXT=pdf&KEY=l6KjPzSYBBGzROuioxedUNdVqq1wFeRogQctIGg1LN12ZNTCUbMnkg==&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"CEE Quarterly - Adjustment postponed in auspicious environment (2Q24)","titleDe":"","titleIt":"","product":"CEE Quarterly","synopsis":"<p><ul class=\"ucrBullets\"><li>We expect the EU-CEE economies to grow by around 2.6% in 2024 and 3.0% 2025, with the Western Balkans growing marginally faster. We expect GDP to grow by 3.2% in 2024 and 4.0% in 2025 in Turkey and by 2.8% in 2024 and 1.3% in 2025 in Russia.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li>Private consumption is likely to lead the growth rebound, helped by faster real wage growth, rising borrowing and government transfers. Public investment will be the second-largest growth driver, while net exports will drag on GDP dynamics this year.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li>We see budget deficits of less than 3% of GDP in 2024-25 in Bosnia-Herzegovina, Bulgaria, Croatia, Czechia and Serbia, with deficits of more than 5% in Hungary, Slovakia, Poland and Romania (all at risk of excessive deficit procedures), as well as Turkey.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li>We expect pro-EU parties to win more than two thirds of EU-CEE seats in the European Parliament, thereafter claiming more important positions in European institutions and NATO.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li>We see a trade-off between lower budget deficits and higher inflation in Poland, Romania and Turkey, where we expect inflation targets to be missed in 2024-25. In Hungary, this trade-off could be postponed beyond 2025.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li>We expect rate cuts this year in Czechia, Hungary, Romania, Serbia and Russia, although the pace of easing could slow in 2H24 and 2025 if currencies come under pressure. We expect the NBP and the CBRT to remain on hold this year, catching up in 2025.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li>Stable capital flows will cover C\/A deficits in all CEE countries except Bosnia-Herzegovina, Romania and Turkey, where additional funding will come from international financial institutions, sovereign external borrowing and private borrowing from abroad, respectively.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li>Enlargement momentum is accelerating, with the Western Balkans likely to benefit if reforms are implemented. The accession process could also bode well for rating upgrades.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li>In our view, the main risks are 1. a test to NATO\u2019s resilience following a lopsided peace in Ukraine, 2. more trade protectionism and lower risk appetite for EM assets if Donald Trump is elected US president, 3. low reform momentum after elections amid voter disengagement, 4. Bulgaria\u2019s probable early elections postponing euro adoption to 2026 and 5. limited EU transfers to Hungary and Slovakia due to standoff with EU institutions.<\/p><\/li><\/ul>","synopsisDe":"","synopsisIt":"","hash":"4d1f67fd85d66cd59464faa9b121f111703ed396e1cc191ceb847fb9f91fdbce","available":"0","settings":{"layout":"detailed","size":"default","showanalysts":"-1","showcompanies":"-1","showcountries":"-1","showcurrencies":"-1","nodate":"0","notitle":"0","noproduct":"0","noflags":"0","dateformat":"d M y","nolinktitle":"0","synopsislength":"600","synopsisexpand":"1","shownav":"0","oldestedition":"","limit":"2"}},{"layout":"detailed","uid":2683,"publicationDate":"26 Mar 24","emaObject":{"protectedFileLink":"https:\/\/\/DocsKey\/economics_docs_2024_186321.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJACkeUMzD3sVeHqwEVRGV0E=&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Economics Chartbook - Global monetary policy approaches turning point","titleDe":"","titleIt":"","product":"The Unicredit Economics Chartbook","synopsis":"<p><ul class=\"ucrBullets\"><li><strong>Global: <\/strong> Global GDP will likely grow by 2.9% this year and by 3.1% next year. This is subdued compared to historical averages, reflecting the lagged effects of tight monetary policy, reduced household savings buffers, softening labor markets, and less supportive fiscal policy. Disinflation remains on track, despite core inflation being stronger than generally expected at the start of the year. Services will likely contribute more to disinflation ahead as labor markets are softening, short-term inflation expectations of firms and households have eased meaningfully, and firms report finding it harder to pass on rising input costs to consumers. Most central banks are getting closer to cutting interest rates, while the BoJ bucked the global trend by exiting negative rates.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong>US: <\/strong> We continue to see GDP growth slowing to 1.8% this year and to 1.0% in 2025, down from 2.5% last year, as the strength of the consumer is likely to wane. We expect CPI inflation to fall to slightly above 2% by the end of this year, with core inflation following one quarter later. Further progress on disinflation is likely to come from housing and non-housing core services. The Fed will likely cut interest rates by 125bp this year, starting in June, and by 100bp next year. We expect an announcement on slowing the pace of Quantitative Tightening (QT) in May for a June start.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong>Eurozone: <\/strong> Our growth forecasts of 0.5% for this year and 1.2% for 2025 remain on track. We see a slow improvement in the quarterly GDP path as real-wage growth turning positive should support private consumption, while monetary policy will continue to restrain activity. The resilience of the labor market contains downside risks to activity and buys time for the ECB. Headline inflation will likely ease to 2% in 2H24 and fall below the ECB\u2019s goal in 2025. June remains the most likely timing for the first rate cut, but the path thereafter is highly uncertain. We still expect three 25bp rate cuts this year, one per quarter, followed by similar steps next year until a more-neutral level is reached, probably in the 2% area.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong>CEE: <\/strong> We forecast EU-CEE economies will grow by 2.6% in 2024, helped by private consumption and public investment amid EU transfers, and by 3% in 2025, when foreign demand and capex are likely to rebound. We expect GDP to grow by 3.2% in 2024 and 4.0% in 2025 in Turkey, and by 2.8% in 2024 and 1.3% in 2025 in Russia as the fiscal impulse fades and real monetary conditions remain tight. Central banks in Czechia, Hungary and Russia will likely cut rates this year, while those in Poland and Turkey could start easing in 2025.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong>UK: <\/strong> GDP will likely broadly stagnate this year (-0.3%) followed by modest growth in 2025 (0.8%). The labor market is clearly deteriorating, and household savings buffers have been exhausted. The Spring Budget tax cuts are unlikely to change this. Inflation will fall below 2% in April, with core inflation easing to around 2.5% in 2H24. We expect the BoE to cut the bank rate by 75bp this year, starting in August, and by 175bp next year.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong>China: <\/strong> We confirm our GDP growth forecast of 4.5% for 2024 and 4.3% in 2025, down from 5.2% in 2023. Although the National People\u2019s Congress set a growth target of \u201caround 5%\u201d for 2024, in line with last year, we believe that low consumer confidence, high youth unemployment, timid policy support across the board, a bloated real estate sector and an unfavorable geopolitical context will weigh on China\u2019s economic performance. The PBoC will likely continue to recalibrate different lending facilities at the margin.<\/p><\/li><\/ul>","synopsisDe":"","synopsisIt":""}]


Global Head of Research

Marco Valli
Global Head of Research
Chief European Economist
+39 02 8862-0537

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The Unicredit Economics Chartbook

The Unicredit Economics Chartbook
Global monetary policy approaches turning point

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