20130925-巴黎银行证券-CEEMEAnomics_15页_1018kb

CEEMEA Weekly Summary – 25 September 2013

Core Content Overview

This report provides a detailed analysis of economic developments and market dynamics in several CEEMEA (Central and Eastern European Markets and Emerging Asia) countries, including the Czech Republic, Poland, South Africa, Saudi Arabia, and Hungary. It focuses on capital flows, inflation expectations, central bank policies, and the broader economic outlook for each country.

Main Themes and Key Insights

1. Emerging Markets and Capital Flows

• The US Fed's decision to delay the tapering of its bond-buying program has led to increased capital inflows into emerging markets.
• South Africa saw its highest weekly net inflows into bond markets since mid-2012, with non-resident demand for local debt reaching ZAR 7.6bn last week.
• Despite this, the report remains cautious about future capital flows due to weak fundamentals such as twin deficits and the fickle nature of portfolio flows.
• The rand is viewed as vulnerable to sudden shifts in risk sentiment, and the report maintains a bearish outlook for the currency over the medium term.

2. Czech Republic

• The Czech National Bank (CNB) has been discussing the possibility of direct FX intervention to boost inflation, but the likelihood of such action is declining.
• The CNB has not intervened in the market, and the report expects no policy change on 26 September.
• The economy has recovered from recession in Q2 2013, with growth of 0.7% q/q, and deflationary risks are waning.
• The CNB is likely to maintain its zero interest rate policy for some time, with FX intervention seen as a less probable tool.

3. Poland

• The report expects moderate inflation acceleration in 2014, with CPI inflation likely to remain below the central bank's 2.5% target.
• Excise tax increases on alcohol and tobacco, as well as base effects, are expected to temporarily raise core inflation, but underlying pressures will remain subdued.
• Unemployment is still high (above 13%), and real wages are falling, contributing to low inflationary pressure.
• Food and energy inflation are expected to remain relatively low, with global commodity prices and base effects playing a key role in keeping inflation in check.
• The report forecasts CPI inflation of around 2.0% for 2014, with core inflation peaking at 2.1% in Q1 2014 before easing.

4. Saudi Arabia

• Saudi GDP growth remains strong in 2013, driven by non-oil sector expansion, despite a decline in oil output.
• The kingdom's current-account and budget surpluses are still significant, even with falling oil prices.
• Inflation remains in check, with CPI inflation expected to stay within the 3–4% range until 2015.
• The exchange rate peg to the USD is expected to remain intact, limiting room for interest rate changes.
• Geopolitical tensions pose a risk to the region, but Saudi Arabia has large reserves to act as a buffer.

5. Hungary

• The Hungarian National Bank (NBH) lowered the main policy rate by 20bp to 3.60%.
• Further rate cuts are possible, but the central bank is expected to adopt a more cautious approach in the near future.
• The easing cycle is not over, with the main rate likely to stay in the 3.00–3.50% range by early 2014.
• The report warns that monetary easing could increase inflationary risks beyond mid-2014.

Key Data and Forecasts

Conclusion

The report highlights a mixed economic outlook across the CEEMEA region. While emerging markets like South Africa and Poland are seeing resilient capital flows, the long-term outlook remains cautious due to weak economic fundamentals and volatile global conditions. Inflation is expected to remain moderate in most countries, with the Czech Republic and Saudi Arabia showing the strongest control over price pressures. Central banks are maintaining accommodative policies, with the CNB and NBH focusing on economic recovery and monetary easing to support growth. However, the report warns that portfolio flows are unpredictable, and any significant policy shifts in the US could lead to volatility in the region.