Sustained strong wage increases should lead to consumption-driven growth. We forecast inflation to decrease gradually, but to persist above target through 2025. Structural rigidities, such as sizable dividend payments, will keep the C/A deficit large.

Consumption remains strong, despite tighter monetary policy. Further monetary tightening and slower depreciation would help ease inflation. The current account deficit looks set to narrow in 2024, which should help authorities maintain Lira stability into 2025.

We estimate Ukraine s external financing needs at around $24 bn for 2024. Securing sufficiently large and timely funding is key for Ukraine s ability to battle Russia, while maintaining economic and financial stability. Rising defense spending will widen fiscal and current account deficits.

The new EU-friendly coalition government in Poland marks a significant shift in power. Investors maintain cautious optimism about some legislative changes, which would allow Poland to ramp up its withdrawals from the EU funds, improving the outlook.

Investors remain concerned about the authorities ability to maintain Lira stability. This is hindering more substantial investments in Lira-denominated assets. The $211 bn in short-term external rollover needs are also a cause for concern but repayments for bonds and loans appear to be manageable.

Inflation momentum is fading in most of the CEE-7 region, except in Turkey. Rising oil price is a risk for the inflation outlook, so are currency depreciations. We expect restrictive stances into 2024 to keep inflation expectations in check.

The policy interest rate hike on June 22 was smaller than market expectation. Output growth appears to remain a key policy priority for Turkish authorities. If lending rates stay below expected inflation, strong credit demand will persist.

Kilicdaroglu is expected to win the presidential elections in the second round of votes on May 28, although the margin of error suggests that confidence in such a prediction should only be medium. The next government will face significant challenges, requiring but not necessarily leading to a pivot to orthodox policies.

GDP growth is expected to soften in 2023, weighed by weaker exports and domestic demand. Fiscal consolidation since 2020 helped improve the outlook for Romania s sovereign credit rating, while spending slippages ahead of the 2024 elections may pose upside risks to the fiscal deficit.

Reduced gas usage in Europe has helped ease demand pressures on gas prices, leaving the region somewhat less concerned about high energy prices in 2023. Growth and inflation in Hungary are expected to slow markedly in 2023, while monetary policy looks set to remain tight.

Russia s current account surplus reached $227 bn in 2022. Exports increased by more than 10% Jan-Sept 2022, while, imports contracted by 16% for the year as a whole. After falling by over 35% in spring, Russia s imports recovered. China, Hong Kong, and Turkey have expanded exports to Russia. Replacing Russia s former top trade partners, such as the EU. China accounts for over 36% of Russia s imports and 20% of exports. Despite export controls, Russia increased its import of chips in 2022. With China and Hong Kong supply about 40% of Russia s total chips.

Growth across CEE-4 remained relatively resilient to external events. But rising inflation began to weigh on consumer confidence in late 22. Monthly indicators suggest further weakening in activity in 22Q4, while risks of a severe recession in the Euro Area in 23 look less likely.

Elevated levels of inflation remain the biggest challenge for CEE-4. Meanwhile, concerns over a recession will likely weigh on demand. This leaves central bankers in a tricky position to strike a balance. The market anticipates interest rate cuts will begin sooner in 2023.

Elevated commodity prices deteriorated CA balances across CEE-4. Fiscal deficits will likely improve in 2022 from a year earlier for most CEE-4, while a higher imported energy bill is expected to widen CA deficits markedly. The region will likely end 2022 with sizable fiscal and CA deficits.

Russia s current account surplus reached $180 bn by end-August. Well on track to hit the forecast of $250-$280 bn surplus in 2022, followed by a current account surplus of about $80 bn in 2023. Russian banks are accumulating FX as the BoR is under sanctions. Due to the risk of further sanctions, Russia is keen to de-dollarize. Despite the creative schemes, progress has been limited so far.

Energy supply shortages will weigh on near-term growth prospects for the CEE-4 region. Covid-driven supply chain stress is off its peak, but a return to pre-Covid norms will take time. The CEE-4 region could help make global supply chains more resilient if the region can attract more FDI.

Russia s fiscal accounts continue to benefit from high commodity prices. Debt-to-GDP stands at 17%, and the NWF fund is 8% of GDP in 1H2022. However, 40% of federal budget revenues come from oil and gas. Revenues will fall due to energy wars and the EU oil embargo in 2023. We expect a federal budget deficit of about 2% in 2022 and 3% in 2023.

Non-residents have cut their holdings of Lira-denominated bonds to historic lows, while still keeping sizable positions in Turkish Eurobonds. Turkey might need to attract more non-resident deposits going forward, unless external debt rollover ratios could be pushed higher.

Global liquidity conditions look set to tighten further, which will force CEEMEA central banks to continue to hike interest rates. Wider macro imbalances also call for tighter policies in some cases. Energy shortfalls could lead to falling output and employment, which would ease demand pressures.

Ukraine has received $6.8 bn in assistance since the beginning of the war. However, the monthly fiscal financing gap reached nearly $4.5 bn in May. $23 bn in commitments for the remainder of 2022 might not be sufficient. The NBU has been providing substantial monetary financing to the budget. To stabilize FX and bring real rates to positive territory, it hiked rates to 25%. Without further support, Ukraine may face a BoP crisis in the coming months.

The CEE-4 outperformed Euro area GDP growth in 2022Q1. Uncertainty and fallout from Russia’s invasion of Ukraine, as well as tighter policies are to blame. Central banks may need to tighten policies further should depreciation pressures rise. Energy supply shortages could trigger a severe recession.

Russia has weathered the de-SWIFTing of key banks better than many expected. Investment in domestic payments and messaging systems since 2014 has paid off. Some concerns are being raised about sanctions circumvention via crypto assets. We believe it to be unlikely that Russia can rely on such channels in the near term. The market appears to be too small relative to the country’s trade and capital flows. U.S. and EU sanctions have also been extended to crypto assets and companies.

Sanctions on Russia combined with supply shortages elsewhere may keep oil prices elevated despite lower global demand. Higher global oil supply combined with weaker demand growth could stabilize the oil market in H2 2022 and in 2023.

An embargo by the EU on Russian crude oil and petroleum products would be impactful. While details are still being discussed, we project meaningful volume reductions in 2022. The final impact over 2022-24 will largely depend on Russia’s ability to redirect exports. Sanctions by the U.S. and EU could make a difference as far as third parties are involved. We estimate Russian exports could be $155 bn lower than the baseline over 2022-24. Uncertainty surrounding this estimate is unusually high due to the number of moving parts.

Russia stopped natural gas exports to Poland and Bulgaria on April 27. Disruptions should be limited for Poland due to high storage levels, with more diversified sources, including LNG imports, also factoring in. We do not expect spillover effects to other European countries’ supplies. However, Russia’s energy policy is prompting them to seek other sources.

An EU embargo on Russian crude oil exports would have a meaningful impact. Oil accounts for one-fourth of Russian exports and around 30% of fiscal revenues. Ultimately, the effect will depend on the country’s capacity to redirect exports. Infrastructure constraints and the threat of secondary sanctions are key challenges. European decision-makers may prefer direct sanctions on the shipping industry. Overall, the EU has a better chance of limiting "seaborne" (vs. pipeline) oil exports.

Russia’s invasion will have a severe impact on Ukraine’s economy in 2022. We expect output to contract by more than 35%-with risks to the upside. The country’s fiscal gap could reach $3-10 bn/month as revenues collapse. Reserves may also come under heavy pressure should the war be protracted. Ukraine needs macro-financial assistance now-not only for reconstruction. Commodity supply chain disruptions will have worldwide repercussions.

Severe sanctions have focused on Russia’s domestic financial system, with freezes of Bank of Russia assets among the most impactful steps. Emergency liquidity support by the CBR stabilized the banking system. The Ruble has also made up most of its losses due to capital controls, together with large current account surpluses and tight monetary policy. We see a tightening of financial sector sanctions as likely going forward.

Sanctions have hit the Russian economy hard, but more measures are likely coming. At this time, the discussion largely focuses on a potential embargo on energy exports. We show that a stop to natural gas imports would be much more difficult than to oil. This is due to both Europe’s gas supply composition as well as the mode of delivery. For Russia, an embargo would have a dramatic effect on overall activity and exports. The country could lose $250-300 bn in export receipts, depending on price dynamics.

We expect the Russian economy to contract by 15% in 2022 due to the war in Ukraine. Sanctions play an important role but so does "self-sanctioning" of foreign companies. Domestic demand will fall sharply, while a collapse in imports will offset lower exports. Together with a decline of 3% in 2023, this will wipe out fifteen years of economic growth. However, the impact on medium- and long-term prospects is likely to be even more severe. "Brain drain" and low investment will weigh heavily on already-subdued potential growth.

The ongoing war in Ukraine clouds the outlook for Turkey’s external deficit. Foreign demand for Turkish goods and services will likely weaken markedly. Higher energy imports and smaller tourism revenues will also be detrimental. However, a weaker Lira should continue to constrain import volume growth. Lower GDP growth, now forecast to reach 2.2%, should also contribute to this. Risks are to the downside with a prolonged military conflict first among them.

Sanctions on Russia following the invasion of Ukraine will lead to a deep output contraction. Soaring energy prices and supply chain disruptions are beginning to affect Europe’s economy. The resulting weaker foreign demand, including from the Euro area, will weigh on EM Europe. In addition, tighter liquidity conditions are likely to be a drag on domestic demand through ‘22. Over the medium term, EM Europe could benefit as investors are withdrawing FDI from Russia. The outlook is clouded by extraordinary uncertainty as the military conflict is likely to drag on.

Russia’s invasion of Ukraine has triggered a number of severe sanctions. China, an important partner, has maintained a deliberately neutral stance. While Russia-China trade is important, financial links remain minimal. China could mitigate Russia’s loss of access to global payment systems. Furthermore, with 40% of reserves frozen, holdings in China are critical. The Bank of Russia (CBR) may need to get creative with FX interventions.

Natural gas imports from Russia have fallen sharply, and storage levels are extremely low. Europe’s high dependence on the country creates vulnerabilities and limits policy options. In the short term, Europe would likely be able to manage even in case of a full disruption. But a full replacement of Russian imports does not seem feasible for a number of reasons. Among them are infrastructure constraints and the lack of alternative supplier capacities. Thus, politically and/or economically painful demand-side adjustments would be needed. Nonetheless, Europe should begin to invest in reducing vulnerabilities while there is time.

Russia’s strategy of interrupting oil and gas flows for political gain will encourage Europe to find alternative energy suppliers. In the near term, alternative supplies to Russian gas are limited. In the medium-term, the U.S., Qatar, and Australia may overtake Russia as the primary gas providers.

Russia’s financial system is dominated by state-controlled banks and highly concentrated. The five largest of these banks represent almost two-thirds of total banking system assets. Foreign institutions only account for 6.3% and have reduced their exposure in recent years. Both Russian banks and corporates were forced to deleverage due to sanctions since 2014. Their external liabilities have fallen by more than 40% to $380 bn, with assets at $530 bn. Total Russian FX holdings of $750 bn can cover external debt, thus reducing vulnerabilities.

Disconnection from global payments systems is increasingly proposed as a "nuclear option". In response to sanctions, Russia has developed domestic payments and messaging systems. But limited international connectivity means cross-border transactions remain challenging.

Upside inflation surprises have prompted rate hikes by CEEMEA central banks. We project demand pressures to remain benign despite the ongoing recovery. Even so, markets are pricing further aggressive rate hikes in the coming months. Rising inflation has pushed up long-term bond yields across the region in ‘21H2. Wider term premiums reflect higher credit risk spreads in Turkey and Romania. South African bonds offer the most attractive real returns among CEEMEA bonds.

Russia has continued to diversify away from U.S. assets due to sanctions. Most evident is the shift in the currency composition of official reserves. The U.S. Dollar now accounts for 16% of reserves, down from 40% in 2014. Reserves have also been moved away from the United States and Europe. External trade settlements in U.S. Dollar are declining, albeit more slowly. Inflation targeting and credible monetary policy led to lower dollarization.

The Nord Stream 2 pipeline is expected to enter into service in 2022H2. Several rounds of U.S. sanctions have delayed but not stopped the project. And the administration is attempting to mend fences with European allies. But additional measures are likely in case of a Russian invasion of Ukraine. For Europe, sanctions related to natural gas imports are highly problematic. However, a Russian escalation of the Ukraine conflict would force hands. German authorities are considering "all possible measures" against NS2.

The recent Lira depreciation is much more pronounced than in 2018. Importantly, the CBRT’s monetary policy response has been different. Rate cuts contributed to depreciation, raising financial stability concerns. FX passthrough will affect rising inflation and inflation expectations. Lira returns above inflation should help ease inflationary pressures.

External financing stress should be moderate in the coming months. Support by the IMF and EU, and the 2021 SDR allocation play a role. As do positive terms of trade and successful placement of Eurobonds. The IMF program’s extension to mid-2022 was of critical importance. Key risks are de-anchored inflation expectations and reform reversal. Furthermore, the conflict in Eastern Ukraine could escalate further.

Favorable commodity price dynamics will drive up current account surpluses. Russia will also be among only a few countries without fiscal deficits in 2022. Inflation remains the key concern and we expect the CBR to continue hiking. Geopolitics continue to play a major role with new U.S. sanctions a possibility. However, Russia appears well-prepared to withstand their potential impact.

Inflation is rising due to higher food and energy prices, deglobalization, and supply chain disruptions. In addition, the recent increases in global CPI stem from widespread monetary easing and expansionary fiscal policy. Inflation may exceed central bank targets through 2022 and into 2023.

The result of higher oil prices is a shift in purchasing power from oil consumers to producers. Oil exporters are getting a boost to their terms of trade, leading to wider CA and fiscal surpluses. Higher energy prices will hurt several EMDEs that remain heavily dependent on petroleum imports.

We project non-resident flows of $128 bn to CEEMEA countries in 2021. Higher FDI and the IMF’s SDR allocation are the most important drivers. Excluding one-offs, however, flows will remain below pre-pandemic levels. G3 tightening will likely reduce investors’ appetite for EM assets in 21Q4. But further rate hikes in CEEMEA should improve portfolio flows in 2022. Non-resident flows to the region are estimated to reach $98 bn next year.

In this note, we update out view on inflation and monetary policy in emerging markets. Rising inflation, even if partially transitory, has forced the hand of EM central banks. We expect inflationary pressures in many countries to peak in the next six months. Slowing growth, favorable base effects, and lower commodity prices will be the drivers. However, rate hikes were also prompted by expansionary fiscal policy in some cases. Furthermore, tightening global liquidity in 2022 may add pressure on central banks.

Growth remains a key policy priority, despite rising inflation. A looser stance by the CBRT will likely weaken the Lira further. This should boost exports while containing growth in imports. As a result, trade and current account deficits will be limited. The inflation outlook is set to deteriorate with a weaker Lira. And the ongoing dollarization trend could gain momentum.

Upside inflation surprises prompted rate hike in most CEEMEA countries. We expect inflation to ease across the region, but high uncertainty remains. In Russia, we now see a higher terminal rate and easing to start later in ’22. The SARB can likely afford to stay on hold longer with only one hike in ‘22. We expect gradual cuts in Turkey through 2022 in line with market pricing. Despite above-target inflation, the Ukrainian NBU will likely stay on hold.

The 2021Q2 output contraction of 0.8% q/q (sa) surprised to the downside. As a result, we have revised our growth forecast for 2021 from 5.5% to 2.7%. We believe the poor Q2 reading is partially caused by statistical idiosyncrasies. A revision with the September release of GDP details is possible, but not likely. Over the medium term, we expect growth of 3.5-4.0% as reform efforts slow.

Upside inflation surprises prompted rate hikes in the Czech Republic and Hungary. If sustained, stable energy prices should help headline inflation to ease into 2022. FX stability should also limit imported inflation and pressure on consumer prices. However, tighter global liquidity conditions will likely prompt rate hikes in the CEE-4. We expect earlier action by the CNB and MNB, with the NBP and BNR waiting longer. Our forecast sees smaller and more gradual hikes than implied by market pricing.

The European Union and the U.S. recently introduced new sanctions on Belarus. We look at precedents for sovereign debt sanctions to assess the potential impact. Primary market restrictions did not have a strong effect when imposed on Russia. But the Venezuela case shows secondary market restrictions to be consequential. For Belarus, Russian support should help limit external financing stress for now.

We use VAR models to decompose the effect of commodities and FX on EM inflation. Turkey and Russia, for different reasons, appear most exposed to exchange rate shocks. Headline inflation in South Africa and Brazil appear to be driven by energy prices, while price dynamics in Indonesia are more responsive to non-energy commodities. We expect tight stances in Brazil, Mexico, Russia, Turkey to keep expectations anchored.

We continue our series on EM inflation by turning towards country specifics. In this note, we examine inflation dynamics in Russia, South Africa, and Turkey. As demand is a key driver of inflation in Russia, we expect further tightening. In South Africa, we see the pickup as transitory and largely driven by base effects. Turkey stands out with the highest inflationary pressures and little room to ease.

Ukraine has weathered the COVID-19 shock well compared to previous crises. We assess balance of payments risks in the next 6-9 months as relatively low. Ample reserve assets and the planned $2.7 bn SDR allocation are key factors. However, a new IMF arrangement will be critical for medium-term prospects. Without IFI support, the external financing gap could reach $4.5 bn in 2022. Risks stem primarily from insufficient progress regarding structural reforms.

We apply a Taylor Rule-based approach to policy making in the CEE-4 and find that rising inflationary pressures point to a need for rate hikes in three of the four countries: the Czech Republic, Hungary, and Poland. Closing output gaps also contribute, while lower real rates provide room.

The COVID-19-induced collapse in international tourism was unprecedented. Even in an optimistic scenario, tourism revenues will remain subdued in 2021. As a result, the economic recovery in countries such as Thailand will be slower. Furthermore, external pressures are set to rise as imports rebound strongly.

We compare the cases of 12 countries that have attempted to unify their FX markets. Unified exchange rate systems eliminate distortions, reduce rent-seeking, and boost fiscal revenues. However, successful unification hinges on consistent underlying credit and fiscal policies and broad reforms.

The United States imposed sanctions on the primary OFZ market last week. We believe that the measures’ impact will likely be manageable for Russia. Domestic financial institutions have sufficient capacity to absorb issuance. An improving economy also supports revenues and reduces financing needs. Secondary market sanctions would be far more consequential but are unlikely.

Increased uncertainty triggered outflows from Turkish assets in late March. Non-residents hold much smaller positions compared to the 2013 episode. Sharply higher cost of borrowing will weigh on near-term growth prospects. Short-term external rollover needs are sizable but look manageable for 2021.

Emerging markets still face the threat of a full-fledged taper tantrum in 2021. For Ukraine, we do not see indications that foreign investors are pulling back. However, their increased engagement in local markets raises the risk overall. Macroeconomic vulnerabilities are markedly smaller than they were in 2013. The main risk is a stalling-or reversal-of the reform course of the last decade.

Robust growth this year and next is expected to intensify inflationary pressures. Even so, the NBP’s policy stance will likely remain accommodative into 2022. Inflows of FX liquidity into Poland should remain robust over the near term. A forced conversion of CHF mortgages would increase banks’ demand for FX. Losses from such a conversion could constrain banks’ ability to extend credit.

The risk of a full-fledged taper tantrum in 2021 is still high for emerging markets. EM assets have already reacted strongly to the pickup in developed market rates. We analyze a number of country cases to see how circumstances differ from 2013. Russia’s macro vulnerabilities are significantly smaller during the current episode. The key risk for investors is a loss of access to the OFZ market due to U.S. sanctions.

The output contraction in 2020 was less severe than expected. Fiscal consolidation should improve the medium-term outlook. Demand pressures will likely keep inflation at elevated levels. We think the BNR’s next move will be to tighten its policy stance.

Activity recovered faster than expected in 2020H2, driven mainly by manufacturing. EU funds should support public investment ahead of next year’s parliamentary elections. The MNB’s monetary policy stance is expected to remain largely accommodative in 2021. But we think service sector reopening poses a greater inflation risk than markets predict. Rising inflation expectations and weaker HUF could bring forward the tightening to 2021.

Russia is experiencing the largest protests in years in response to the jailing of Alexei Navalny. Many Russians are frustrated by stagnating incomes, a weak social safety net, and corruption. Years of fiscal consolidation to address sanctions have exacerbated socioeconomic challenges. However, we do not expect protests to change macroeconomic conditions in a fundamental way.

CEEMEA countries recovered faster from the initial COVID-19 shock than expected. This is mainly due to virus containment allowing for a faster reopening of businesses. As a result, we are revising our estimate of the contraction in 2020 from 5.2% to 3.2%. However, a second wave of infections weighed on economic activity in recent months. We expect modest growth of 3.8% in 2021, but much depends on vaccinations efforts.

We project a mild economic contraction in 2020, followed by a gradual recovery this year. This is due to limited lockdown measures, a strong financial system, and reliance on SOEs. The FY2021 NDAA extended Nord Stream 2 sanctions but may not prevent its completion. Geopolitical risks stem from the incoming U.S. administration and the EU’s green agenda.

Tensions and disputes between the U.S. and China are likely to continue, possibly resulting in further sanctions. We focus on lessons learned from the U.S. sanctions policy towards Russia, and what those could mean for U.S. sanctions towards Hong Kong or China.

Our outlook for Ukraine has steadily worsened over the last twelve months. Pressure on the NBU and unwinding of anti-corruption reforms are to blame. However, Ukraine will likely manage to muddle through in the coming months. Only when macro-policies become untenable, a return to the IMF will occur.

We expect a slow and uneven recovery in non-resident capital flows globally. CEEMEA should fare somewhat better with a broad pickup in ‘20H2 and ‘21. The recovery will likely be driven by stronger FDI and portfolio capital flows. A possible COVID-19 resurgence and geopolitical risks weigh on the outlook. If sentiment worsens, Turkey, South Africa, and Ukraine will be most exposed.

CEE-4 economies have outperformed growth in the Euro area in recent years. Growth has been driven largely by private consumption and capital formation. But the Euro area’s weakness could be a drag on the medium-term outlook. Structural changes in sectors such as car manufacturing represent a challenge.

The CEE-4 will likely experience relatively moderate GDP contractions. Fiscal and monetary stimulus measures support private consumption. Despite rising COVID-19 cases, major lockdowns are unlikely to occur. Medium-term growth prospects remain promising across the region.

Turkey’s current account balance will shift to a sizable deficit in 2020. Meanwhile, non-residents remain reluctant to finance the external gap. Residents’ strong FX demand adds to depreciation pressure on the Lira. Falling reserves constrain the CBRT’s ability to provide further stimulus.

Investors are concerned about the possibility of additional sanctions on Russia. German officials have threatened action against Nord Stream 2 in recent weeks. This would have important geopolitical, but likely limited economic, implications. Additional sanctions by the U.S. could depend on the 2020 presidential election. However, the Russian economy is substantially less vulnerable compared to 2014.

Demonstrations and strikes continue following the disputed election. The most likely near-term scenario is a prolonged political stalemate. We consider a number of scenarios to assess external financing stress. In the absence of further escalation, reserve losses would be manageable.

Widespread demonstrations and strikes followed the presidential election on August 9. Political uncertainty, together with the COVID-19 shock, weigh on the economic outlook. Belarus’ economy is highly dependent on Russia’s energy subsidy and domestic SOEs. The disputed election results mean that international financial support is very unlikely.

The Caucasus and Central Asia (CCA) region was hit hard by COVID-19, with energy exporters also enduring the oil price collapse. Exchange rate flexibility, support from the IMF, and low risk of sovereign debt distress will help most CCA countries remain stable through 2021 absent further outbreaks.

The COVID-19 response will improve medium-term growth prospects for the CEE-4. Stronger government finances provided countries with room for stimulus measures. The ECB’s response has also allowed authorities to cut rates and start bond purchases. Finally, the EU’s proposed recovery fund would improve growth prospects markedly.

EM are experiencing an unprecedented and synchronized growth slowdown in ‘20. Restrictions remain in place in many countries, as the health crisis is far from over. The fiscal response has been uneven in EM, with some running out of policy space. Most EM central banks cut rates aggressively, and QE has become part of the toolkit. Asset price recovery and a modest return of capital flows should provide support.

Ukraine has secured a $5 bn, 18-month Stand-By Arrangement with the IMF. This stopgap will help finance fiscal spending and external debt repayments. Improved market conditions will allow Ukraine to build up reserves further. We project an output contraction of 6.9% despite aggressive interest rate cuts. Further structural reform efforts are critical for robust growth going forward.

We now expect an even deeper output contraction of 5.7% in the CEEMEA region. Effects of the COVID-19 shock are increasingly visible in the data for March-April. We downgrade growth in South Africa, the Czech Republic, Ukraine, and Russia. The fall in activity prompted authorities to implement fiscal stimulus measures. Together with cyclical revenue weakness, additional spending will widen deficits. CEEMEA central banks cut rates and some began government bond purchases.

Russia’s assets are stabilizing, and investors are showing renewed interest. The "Fortress Russia" strategy has reduced macroeconomic vulnerabilities. We expect both the fiscal and monetary policy responses to remain modest. As the economy is set to reopen, COVID-19 infections continue to spread.

COVID-19 is projected to bring about a 4.7% output contraction in 2020. This is partly the result of the looming deep recession in the Euro area. Virus containment measures will also lead to weaker domestic demand. Markedly wider fiscal deficits could intensify debt sustainability concerns.

The OPEC+ bloc agreed to cut oil production by a record 9.7mbd. Assuming full compliance, we expect Brent crude to average $40/bbl in 2020. Cuts will last through April 2022, at lower levels. Major non-OPEC+ producers will cut by up to 3.5mbd. Inventories should peak in Q2 and then drop in H2.

We now expect a recession in CEEMEA as a result of COVID-19. CEE will be affected by Euro area contraction but has policy space. ussia’s buffers and flexible Ruble should reduce impact on growth. Lower growth will markedly worsen debt dynamics in South Africa. Recession concerns could trigger further policy easing in Turkey.

Authorities aim at boosting capital spending through the credit channel. Turkey’s external vulnerabilities have been somewhat reduced in 2019. Credit growth buffered the economy from weaker growth last year. Global recession risks pose significant challenges for growth in 2020.

Romania’s fiscal picture continued to deteriorate significantly in 2019. Corrective measures are needed, including a delay of pension increases. Early elections could provide a new government with the needed mandate. In the absence of fiscal consolidation, the loss of investment grade looms.

Economic sanctions are a form of government market intervention and can have significant unintended and uncertain consequences-particularly if they are placed on an economy highly integrated into the global economy and the international financial system. In this respect, the measures taken by the United States and its allies against Russia beginning in 2014 represented a paradigm shift.

Sanctions on a highly-integrated economy such as Russia are still unprecedented. Unforeseen and unintended consequences could significantly shake up markets. The impact is likely most significant for asset managers and banking institutions. But further consequences for the underlying market infrastructure are possible.

The debate on U.S. sanctions on sovereign debt is expected to continue in '20. Low macroeconomic vulnerabilities will likely limit the impact on Russia. U.S. investors would lose out given investments in Russian domestic debt. Unintended consequences could also significantly shake up global markets.

Large amortization payments will leave Turkey exposed to rollover risk in 2020. The composition of amortization payments should alleviate some of the concerns. Net foreign borrowing will continue to be an important determinant of growth. Residents could withdraw from assets abroad if they fail to roll over maturing debt.

Ukraine’s new agreement with the IMF is critical for external financing, even though recent flows into domestic bonds have alleviated pressure. The agreement signals confidence in ongoing reform efforts to markets, and will lead to renewed investor interest in local government bonds.

EU structural funds have boosted growth in Eastern Europe, allowing for strong income convergence with the rest of the EU. Cuts in the 2021-27 EU budget will lead to smaller contributions, but a sudden slowdown is unlikely, and convergence will continue.

Bank lending remains the main policy tool to boost growth. Macroeconomic imbalances seem manageable at this time. Further stimulus, however, could intensify demand pressures.

Russian authorities announced a policy pivot towards growth. National projects exceed 3% of GDP per year over 2019-24. Apart from national projects, policies will likely remain tight. We therefore expect only a modest pickup in Russia’s growth.

Growth in the Euro area slowed considerably in 2018 and 2019H1. CEE countries are highly integrated into European value chains. We already see evidence of a slowdown in industrial production. However, domestic demand continues to support robust growth. In case of further shocks, policy space is not universally available.

Investor interest in government bonds has picked up in recent months in the hope of a change in government and implementation of reforms. Macroeconomic imbalances, however, have risen to concerning levels, and a renewed EU Excessive Deficit Procedure is clearly on the horizon.

Nord Stream 2 and TurkStream will change gas transit in Europe, allowing Russian gas to reach Western Europe while bypassing Ukraine. Transit through Ukrainian pipelines could decrease as much as 80%, widening the current account deficit and increasing financing needs. Sanctions on both pipeline projects are being discussed in Congress.

Bank lending and accommodative policies helped output recover in 2019H1,but a continued fall in investment limits the pace of real GDP growth. TRY depreciation has led the current account to shift to a surplus, and FX reserves appear sufficiently large to cover external debt repayments.

Borrowing costs have fallen sharply as a result of policy changes. Lending remains subdued due to concerns over bank asset quality. Credit-fueled growth has increased private sector indebtedness. Banks remain well-capitalized and profitability is set to increase.

Robust growth has returned, driven by consumption. Non-resident inflows have led the Hryvnia to appreciate. A new IMF program is expected by the end of the year. The key risk to the outlook is potential for policy inaction. Public debt appears sustainable, assuming FX stability.

The risk of automation in CEE is relatively low compared to other EMs, but differs considerably within the region, with EU member countries facing less risk. The skill composition of employment appears to play an important role, as does an economy’s relative urbanization and labor market diversification.

Labor shortages and fragile investor confidence will constrain output growth. Policies will likely become more accommodative, thanks to a dovish ECB and Fed. The external financing and inflation outlook will remain challenging for some. Slow progress in addressing structural problems will intensify vulnerabilities.

Strong domestic spending has kept output above potential, intensifying inflation pressures. Weaker foreign demand should allow policies to remain accommodative in the near term. Labor shortages and reduced access to EU funds will be the main medium-term challenges.

EU structural funds have boosted growth in Eastern Europe, allowing for strong income convergence with the rest of the EU. Cuts in the 2021-27 EU budget will lead to smaller contributions, but a sudden slowdown is unlikely, and convergence will continue.

Consumption-driven growth has led to increasing imbalances and inflation. Ad-hoc policy changes weigh on sentiment, undermining new investment. Further stimulus would pose risks to macroeconomic stability and outlook.

A fiscal stimulus program provided support to private consumption and growth in early 2019. Accommodative policies are expected to continue through 2020, helping growth to remain robust. One-off revenues and cyclically strong tax collection will mask the deterioration in fiscal discipline.

Georgia has shown impressive resilience during the period of an economic slowdown in the region. The government’s Four Point Plan is expected to remove structural bottlenecks and support strong growth. However, the economy remains vulnerable to regional developments and external shocks.

In this edition of Sticky Notes, we look at key issues facing the incoming U.S. Congress, new realities in Mexico, U.S.-China trade talks, and potential auto tariffs.

Private sector balance sheets are susceptible, at varying degrees, to external debt rollover risk and lira depreciation. Under the currently improving, yet fragile, investor sentiment, Turkey’s sizable amortization payments will continue to expose the economy to high rollover risk through 2019.

Early this year we signaled rising EM risk , especially for Argentina and Turkey. We also flagged growing potential for contagion to the broader EM co.

Last year's policy mix widened the current account deficit considerably. Financing remained available but became increasingly expensive. The lira is n.

Early this year we identified the Lira as significantly overvalued , given last year's policy mix that widened the current account deficit. However.

Sanctions and low oil tipped Russia into recession in 2015, and made capital flows decouple from broad EM trends. Growth recovered but capital flow.

Supply-side constraints will reduce the growth rate to 3.7% this year. Monetary policy normalization has begun, but fiscal policy turned pro-cyclical.

External funding remained resilient through a period of volatility, but borrowing costs have risen, and the risk of sharply reduced access to n.

Growth has picked up sharply, driven by investment and private consumption. Policies are expected to remain largely accommodative through this year an.

We develop a framework to assess the monetary policy stance, that trades off rate hikes versus projected inflation. FX passthrough from Lira deprec.

Economic growth has been high, but is increasingly driven by consumption. Productivity growth slowed since 2009 and investment remains relatively low.

IMF assistance has helped stabilize the economy after a difficult period. The external financing picture remains weak and will strain reserves. A new.

The macroeconomic policy setup is sound with low inflation and a narrowing fiscal deficit.' Real GDP growth has underperformed its neighbors since 201.

A government sponsored credit boom helped boost 2017 growth. Resulting strong domestic demand widened the current account deficit.' This leaves Turkey.

Trade wars could dent profit margins, challenging expectations of strong earnings growth European investors likely to keep calm and carry on after dov.

Real GDP growth was strong in 2017, fueled in part by a sizable credit impulse.' This year, the credit impulse will likely be negative.' We forecast a.

The March presidential election will return President Putin for his fourth term. Putin leads polls with preferences at around 70%, other candidates si.

Our model suggests that a USD10 pb oil price increase boosts the current account by USD15 billion.' The current level of oil prices, if maintained, wo.

Sizable government credit guarantees boosted output growth this year. With the credit impulse weakening, output growth will likely slow down to 4% or.

Increasing share of non-residents makes the sovereign bond market more sensitive to investors' sentiment. A lower yield curve and abundant domestic li.

Phillips curve estimation suggests that supply-side effects explained the core inflation decline. A stronger ruble contributed to lower inflation and.

Ongoing lira weakness highlights the growing risks to external financing and inflation outlook. The larger current account deficit financed mainly by.

Strong domestic demand will likely push real GDP growth to 5% in 2017H2.' Headline inflation will probably fall before rising above the inflation targ.

Output growth remains driven by domestic spending. Tight labor market conditions and strong wage growth add to inflationary pressures. Despite intensi.

Due to the strong link to global oil prices, EE countries witnessed large swings in fuel prices in 2017. The effect of volatility in fuel prices on he.

Regional output will likely increase to 3.7% this year, the fastest growth since 2007.' Turkey and Romania will likely grow the fastest, at the expens.

The current account surplus will likely remain below $40 billion this year, despite oil prices rising 20% from 2016. The import substitution policy, p.

Changes in export volumes in Emerging Europe are much more responsive to external demand conditions than to exchange rate movements in the short-run.'.

The central bank lowered its overnight deposit rate by 10 bps to negative 0.15% on September 19 while keeping its key policy interest rate of 3-month.

Long-awaited economic strategy plan limits its focus to the fiscal agenda. Kudrin argues that Russia must increase "productive" spending and limit the.

Our estimates suggest that last year's failed coup attempt has reduced output by as much as 4%. The recovery has been very strong, however, mainly due.

The central government budget shifted to a surplus after the first six months of 2017.' The budget is likely to slip back into a deficit as the early.

The US extended existing sanctions on Russia, and imposed new ones, in August, affecting oil, gas, railway, and banking sectors, further limiting acce.

The general government budget is likely to remain in surplus this year, as tax revenue grows robustly and capital expenditures remain at their lowest.

The Financial Conditions Index (FCI) measures the financial sector's stress in major Emerging Europe markets, strongly and negatively correlated with.

Fiscal policy has turned expansionary in the region this year, with Romania, Turkey and Hungary adjusting structural deficits and widening by 1.5% of.

The central bank may decide to wait on another interest rate cut until later this year, as weaker ruble feeds into inflation expectations and will lik.

The fiscal deficit that narrowed to 2.2% of GDP last year is likely to widen to 2.9% this year, as the government increases pensions and spending on d.

Recent stimulus measures bolstered domestic demand. With strong domestic spending boosting imports, a larger trade deficit widened the current account.

Further fiscal expansion will likely jeopardize Romania's access to EU funds.' Consumption-driven output growth will continue, adding to inflationary.

Prodded by the IMF and domestic reform activists, the government has implemented several important reform steps and submitted a pension reform plan to.

Output has risen above potential in all four countries as real GDP growth is set to rise to 3.5% this year. At the same time, fiscal balances are wors.

Headline inflation remains well above the 8' 2% target, thanks mainly to the recent hikes in utility prices.' Stepped up foreign demand suggests stron.

Higher oil prices will likely help narrow the fiscal deficit to 3% of GDP this year from 3.7% in 2016. The break-even oil price was decreasing from a.

The Euro zone is a unique opportunity to examine Phillips curves at the country level. We examine for which countries within the Euro zone the Phillip.

The koruna appreciated 2.5% against the euro after the exit from the fixed currency regime. The central bank has sought to moderate the appreciation t.

Inconclusive election adds uncertainty, but tough Brexit negotiations still on the table.

While keeping its key policy interest rates unchanged, the central bank lowered the cap for its 3-month deposit facility further from HUF500 billion f.

The central bank cut its key policy rate in line with the consensus by 25bps to 9%.' With the 12-month headline inflation close to its target, the cen.

The central bank kept its key lending rates unchanged on June 15.' The expected Fed tightening through 2018 will likely reduce global risk appetite fo.

This GMV begins our look at how QE affected balance sheets, by compiling flow of funds data on supply and demand of government bonds as consistently.

Real GDP growth in CEE4 (Czech Republic, Hungary, Poland, and Romania) accelerated to 4.1%y/y in 2017Q1 propelled by booming domestic demand. Output g.

Strong real GDP growth in 2017Q1 was in line with our above-consensus estimate.' Growth was fueled mainly by temporary tax cuts, with private consumpt.

We are able to explain the trajectory of core inflation using a simple list of macro factors - including exchange rate movements, commodity prices and.

PM May's snap election backfires spectacularly and a Conservative power struggle could follow. Hung parliament with the Northern Irish DUP providing C.

Market scrutiny of ECB communication will be more intense than ever at its Governing Council meeting on Thursday. We expect the ECB to acknowledge ris.

A recovery continued in 2017Q1 with the economy growing at 0.6% from the previous quarter on the back of recovering investment and modest growth in pr.

A recent surge in bids by banks to borrow FX from swap auctions was driven by wider arbitrage spread.' On May 15, the central bank introduced a limit.

Since January 2017, the ECB has been allowed to buy sovereign bonds under its public sector purchase program (PSPP) at yields below the deposit rate,.

Driven by loose monetary policy and fiscal expansion, seasonally and working day adjusted real GDP growth accelerated to 1.3% in 2017Q1 from 0.7% in 2.

Headline inflation remained at 2.0% in April, with 12-month core inflation rising to 0.9% from 0.6% in March, the highest level since 2014. Real GDP g.

With headline inflation close to its target and the ruble appreciating 6% in 2017, the central bank cut the policy rate by 50bps in April to 9.25%. Al.

We expect GDP growth of 1.4% in 2017 and 0.0% in 2018 Reality is starting to bite as inflation is putting downwards pressure on consumption " " and.

We have revised up our real GDP growth forecast to 4.2% for 2017 (previously 3%) and to 3.5% for 2018 (previously 3.2%), thanks in part to the reduced.

Fiscal deficit widened to 3% of GDP last year, from 0.8% in 2015, as the VAT rate cut reduced government revenues by 1.6% of GDP. Further widening of.

In the run-up to the referendum, investor sentiment on Turkey was quite negative. But it is now more positive, with the close election result seen to.

The Institute of International Finance organized a series of European Policy Dialogues with senior European officials alongside the Spring IMF / World.

With 51.4 percent of voters having voted in favor of constitutional changes in the April 16 referendum, Turkey is set to replace its parliamentary sys.

French voters go to the polls on April 23 for the presidential election Emmanuel Macron and Marine Le Pen are currently tied in first place in the opi.

A recent acceleration of growth is threatened by the blockade of the occupied territory in eastern Ukraine and by halting implementation of the IMF pr.

The euro area continued its robust recovery in 2016, with GDP growth of 1.7%, outpacing the US. We expect growth to remain robust in 2017 and 2018. In.

Our visit to Poland last week came on heels of the contentious attempts by the Polish authorities to block re-appointment of the former Polish Prime M.

We expect robust GDP growth to continue, driven by domestic demand Investment is set to boom, with the housing market a particular highlight Germany i.

Real GDP growth in the region is likely to pick up in 2017 to 2.1% from 1.4% in 2015 and 2016. Higher growth reflects end of recession in Ukraine and.

Headline inflation has risen above target for the first time in four years. Inflation has turned positive in all euro area countries-specter of deflat.

The European political outlook continues to evolve. This report updates on the latest developments in France, Germany and Italy. In France, Emmanuel.

Real GDP growth slowed to 2.3% last year as investments shrank by 2% amid reduced transfers from the EU budget.' Growth is likely to stay at 2-2.5% th.

A series of shocks appears to have slowed real GDP growth sharply to 1.7% last year and growth is likely to decelerate further to 1.5% this year as th.

Our discussions during our Moscow trip last week centered on recent appreciation of the ruble against the US dollar (+4% since beginning of 2017) and.

D j vu for Greece: Hoping for a compromise on debt relief A recent visit to Athens has brought back a sense of d j vu! Unfortunately, Greece is.

Real GDP declined 0.2% in 2016, but growth resumed in the second half of the year.' Rising oil prices helped stabilize the ruble at RUB/$60 level, 20%.

Le Pen takes the lead from Fillon in the latest French first-round polls Macron is building momentum and is a serious contender SPD nominates Schulz a.

Real GDP growth slowed to 2.8% in 2016, down from 3.9% a year earlier.' Slowdown in transfers from the EU budget and rising political uncertainty weig.

UK Supreme Court upholds parliamentary sovereignty More involvement from Parliament will not significantly alter course Hard Brexit from EU remains ba.

Core inflation remains weak, despite massive monetary stimulus We think the balance of risks to inflation and growth are no longer to the downside" ".

Out means completely out In a long anticipated speech, Prime Minister May today laid out the principles informing her plan for exiting the European U.

No changes to existing policy measures ECB will look through upside news in inflation as "temporary" " " but pressure on ECB to end asset purchases i.

In an attempt to ease depreciation pressures on the lira, the central bank lowered reserve requirements for FX liabilities and slightly tightened the.

Real GDP growth has slowed as EU budget transfers fell in 2016, despite supportive fiscal and monetary policies.' Lower growth prompted an increase in.

The country's largest bank was nationalized on Sunday, December 18.' PrivatBank, owned by the oligarch and former Dnipro governor Ihor Kolomoisky, con.

Real GDP growth remains weak, averaging 1% so far this year. Worryingly, growth momentum has rotated to private consumption in the third quarter, with.

At the ECB's Governing Council meeting on Thursday December 8, we expect President Mario Draghi to announce an extension of the asset purchase program.

As expected, Italians voted to reject proposed reforms to the Constitution, although the margin of 59-41 was much larger than projected by the polls (.

As expected after his clear first round victory, Fran ois Fillon beat Alain Jupp in the French Republican primary runoff on November 27 with 66.5%.

The government has submitted its budgetary plans for years 2017-2019, in which it plans to reduce the deficit from expected 4.7% of GDP this year to 1.

The economy is slowly recovering on the back of growth in consumption and stabilizing inflation. Increasing consumption and lackluster export growth h.

Italy to vote on reforms to limit the powers of the Senate We think a "No" vote is the most likely outcome PM Renzi likely to resign in the case of a.

Our recent trip to Budapest reaffirmed our view that policy framework is becoming increasingly more complicated in Hungary as the authorities are look.

Economic resilience is coming to an end. Uncertainty is the only certainty in the Brexit process. Trump p.

Expansionary macroeconomic policies and buoyant consumer confidence are likely to propel near-term growth.' The widening trade deficit suggests that t.

With the output gap closed, growth should reach 2.7% this year and 3% in 2017. Exports remain the main driver of growth, widening the current account.

BRACE FOR IMPACT Our recent trip to Romania preceded parliamentary elections and coincided with the adoption of the Swiss franc mortgage conversion b.

At Thursday's meeting, the ECB Governing Council will face stubbornly low inflation despite an economic growth outlook that is slightly better than ex.

Emerging Europe region is likely to grow modestly 1.2% this year and 2.1% in 2017. While real GDP growth is higher than last year's stagnation, it is.

Article 50 to be triggered before April 2017. UK priorities point towards a "hard" Brexit. Financial services are in the crosshairs. Initial calm, but.

The failed coup attempt on July 15 has intensified investor concerns, leading to repricing of Turkey's country risk and tilting growth risks to the do.

POLICIES TIGHTEN AFTER ELECTION Last week's trip to Moscow followed the parliamentary elections and coincided with the government's discussion of nex.

The immediate impact of Moody's decision to downgrade Turkey to non-investment grade has been relatively benign in financial markets, suggesting that.

Our recent trip to Warsaw left us with an impression that the implementation progress of the structural reform agenda has been less than satisfactory.

THE FAR-RIGHT FREEDOM PARTY SETS THE AGENDA Our September visit to Vienna coincided with announcements of a delay in the Presidential election re-run.

Helped by firmer oil prices, the ruble has stabilized at RUB/$65 level since April.

Political tensions reflect a deepening sense of disconnect between voters and officials and perceived intangible threats to national identity.

When the ECB Governing Council meets on Thursday, September 8, it will see a challenging landscape. The impact of Brexit on the region's financial mar.

Corporate investment will be held back. Government can do little to undo damage from uncertainty. Winners and los.

Today's flash PMI for the UK and the euro area confirms our view that the economic impact from Brexit is asymmetrical, with the UK bearing the brunt o.

The failed military coup in Turkey has rattled markets and raised political uncertainty. Immediate losses from lower tourist arrivals and deferred inv.

Growth should resume in the rest of 2016, but it will most likely be centered on consumption, helped by increasing social spe.

Safe havens and bargain-hunting Brexit damage assessment' Mexico-exposed but resilient Frontier Africa-adjusting to new realities Qatar-weathering low.

Europe is most affected by spillovers, the United States less so. More d.

Brexit is likely to dampen exports f.

The conservative PP won a larger plurality in yesterday's rerun of the December general election but, once again, failed to win a majority. PP won 33%.

The authorities seem determined to offset a slowdown in private investment by relaxing macroeconomic policies and stimulating domestic consumption. T.

The unexpected Brexit win by a solid margin (51.9% to 48.1%) has cascaded across international financial markets. The GBP has taken an unprecedented o.

On Friday, June 17, the IIF hosted a presentation at our Washington D.C. office of the IMF's Financial System Assessment Program (FSAP) report on the.

The IMF is likely to finally disburse the third tranche of its program in July or August, almost a year later t.

A PERFECT STORM FOR MARKETS? Global equities slumped again today, with major government bond yields dropping to new record lows; further yen strength.

Wary markets ahead of key Fed, Brexit decisions' ECB -' wait-and-see mode Japan - when your best may not be good enough' Portfolio flows to EMs grind.

As the ECB prepares for its monetary policy meeting on Thursday, June 2nd, the focus is likely to remain on the implementation of the various policy m.

Our discussions during our Moscow trip last week confirmed the key message from our April report Quest for Credibility : the central bank is likely.

Our recent trip to Ukraine coincided with the arrival of a new government. After four months of negotiations, the ruling coalition holds a very slim m.

Turkey's main near-term challenge is the deteriorated domestic security situation and intensified ge.

After refocusing on credit easing in their March meeting, Draghi and the Council are not expected to make any major policy changes when they meet on T.

Merkel is weakened domestically. France is entering a year of presidential elections. There is very little polit.

Hungary has maintained fiscal discipline in recent years, but the government's policy choices have harmed investor sentiment and lowered potential gro.

The economy performed well in 2015, and the output gap has closed. Headline inflation remains well below the central bank's target despite output at p.

When the Governing Council meets on Thursday, March 10th, President Mario Draghi faces difficult challenges-responding to disinflationary pressures in.

The new Polish government, elected in October last year, has an ambitious agenda of social, institutional and economic reforms that it believes will t.

The overwhelming takeaway from our recent trip to Warsaw is uncertainty about policy prospects as authorities grapple with the new government's ambiti.

The view from both official and private sector meetings in Frankfurt is that the Euro area economy maintains momentum for now but risks are rising, pa.

One year after the ECB's unprecedented QE decision, the Governing Council continues to face the challenges of low inflation and moderate growth when i.

With the euro continuing to weaken, and short-term Euro Area bond yields falling to fresh record lows amidst raising expectations of additional stimul.

Economic policy in Poland is likely to change after the socially conservative, but economically populist, Law and Justice (PiS) party won the October.

When the ECB Governing Council meets Thursday, October 22, it will see sluggish inflation-the elephant in the room-as one reason to consider expanding.

There is significant uncertainty around the outcome of repeat elections on November 1. Recent polls point to a similar split result to the June electi.

Twelve-month headline inflation rem.

Real GDP growth appears to have suffered after an unexpectedly strong first quarter. On balance, we have ma.

The European Commission's proposed Capital Markets Union (CMU) is an ambitious and broadly welcome initiative. Building the role of financial markets.

The European Commission's initiative to build capital markets union (CMU) is intended to lead to a decisive, long-term deepening and integration of Eu.

Despite major real GDP decline in the first quarter of 2015, a stronger ruble and recovering oil prices encouraged officials to proclaim the economic.

China-Growth Momentum Remains Tepid Oil boon fuels EM monetary easing Ukraine-looking for more help iif_we.

Small and medium-sized enterprises (SMEs), the backbone of the European economy, were particularly vulnerable to the crisis in Europe due to their dep.

Stimulus in Europe-all hopes still on monetary policy Manufacturing PMIs- uneven ride Brazil goes orthodox South Africa-hoping for better times.

Spreads and yields for Euro Area periphery borrowers have fallen to remarkable lows on buoyant global risk appetite and expectations of QE-like bond p.

Download PDF (149.04 KB) IIF Authors Jeffrey Anders.

Prior to the recent shift in market sentiment, abundant liquidity and renewed efforts by the ECB to support growth (including a rate cut on May 2) had.

After a week of messy negotiations and flawed proposals, default and devaluation were avoided in Cyprus. Looking ahead, it remains to be seen whether.

Judging from the evolution of key financial variables, there has been steady progress in helping resolve the Euro Area debt crisis in recent months. F.