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South Eastern Europe Economic Forecast

Economic Snapshot for South-Eastern Europe

bet360备用网址March 10, 2020

The outlook for the regional economy this year is much improved compared to last year as the Turkish economy will continue to gain traction. More broadly, still-cheap credit and tight labor markets should buttress wages and regional activity. Risks remain skewed to the downside, however, amid lingering external headwinds such as soft growth in the EU and the coronavirus.

South-Eastern Europe Monetary & Financial Sector News

bet360备用网址Regional inflation rose from 7.2% in December to 7.4% in January as price pressures rose across the region bar in Romania. This year, inflation should ease compared to last year on softer inflation in Turkey, Romania and Bulgaria more than offsetting stronger price pressures in Greece, Serbia and Croatia.

In recent weeks, Turkey’s Central Bank once again cut its interest rate, bringing real interest rates deeper into negative territory. Elsewhere in the region, activity among central banks was muted due to not having a meeting or keeping the policy rate unchanged, as was the case in Serbia. This year, continued easing in Turkey should drive the regional interest rate down.

Over the past month, the Turkish lira depreciated further against the dollar; while the Romanian leu and Albanian lek lost some ground against the euro, and the Serbian dinar was stable. Other economies in the region use the euro or have pegged their currencies to the euro. This year, the regional exchange rate should depreciate against the USD, weighed on by a weaker lira.

 

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