While CEE economies experienced strong growth in 2017, business insolvencies still increased across the region. Companies did not have enough time to fully benefit from the economic recovery as growth is slowing. Insolvencies are expected to continue rising in 2018 and 2019 as supply constraints like labor shortages increase costs for businesses. Construction companies in particular struggled with high material costs and labor shortages, showing up in insolvency statistics. The economic expansion peak has passed and weaker growth ahead will make conditions more difficult for CEE companies.
The document summarizes key findings from an analysis of the top 500 companies in Central and Eastern Europe in 2016. It finds that while employment grew significantly in the region (+3.9%), overall turnover and profits declined slightly. The automotive industry surpassed oil and gas to become the largest sector. Economic growth in the region remained solid at around 3% despite a slowdown from 2015 levels. Unemployment rates reached record lows across most CEE countries.
Macroeconomic Developments Report. July 2013Latvijas Banka
In the first quarter of 2013, Latvia's exports of goods continued to grow faster than imports in both nominal and real terms, driven by Latvian exporters' competitiveness. However, as external demand contracted and the base effect took over, the annual growth rate of Latvian exports decelerated. Most of Latvia's major trade partners saw downward revisions to economic growth forecasts for 2013. While growth is still expected in countries like Estonia, Lithuania, and Russia, the pace is expected to slow. Contraction in the euro area and weak growth in the UK and other European countries poses risks to Latvia's export growth in the coming quarters.
Russia - sharp slowdown and protacted recoverySwedbank
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
1) The Latvian economy experienced a temporary slowdown in the first quarter of 2016, with GDP growth of 1.3% year-on-year but a decline of 0.1% quarter-on-quarter, driven by a large drop in construction output.
2) Exports declined in the first quarter, driven by decreases in machinery, electrical equipment, and re-exports, while import volumes also fell.
3) Retail trade growth was supported by rising incomes in 2015 but may slow in 2016 as wage growth moderates and the contribution from lower fuel prices diminishes. Income levels, lending, demographics, and consumer habits are more important determinants of retail trade in the long run than
- The Baltic Sea region experienced a steep economic decline in 2009, with GDP falling 5.9%. Growth is expected to return in 2010 and 2011 at rates of 2.6% and 3.1% respectively.
- The recovery is dependent on continued growth in emerging markets, which are currently the main drivers of the global economy. Risks to the outlook include turbulence in financial markets and the eurozone sovereign debt crisis potentially slowing demand.
- Structural reforms are still needed across the region to strengthen competitiveness and ensure sustainable long-term growth as countries deal with the effects of the crisis.
"Macroeconomic Developments Report", October 2013Latvijas Banka
The document provides a macroeconomic developments report for October 2013. It summarizes developments in Latvia's external sector and exports in the second quarter of 2013. Key points include:
- Latvia's exports continued to grow but at a slower annual rate due to weakening demand from major trade partners. Exports of base metals declined due to a factory closure.
- Imports declined in both volume and value as production and investment activity decreased. Imports of base metals and vehicles fell the most.
- Despite challenges, Latvia increased its share of world imports according to WTO data. The report examines economic conditions in Latvia's key trade partners.
Companies in Central and Eastern Europe saw insolvencies stabilize in 2014 with a minor 0.5% drop regionally on average. Insolvency levels varied between countries, rising sharply in Slovenia and Hungary but falling significantly in Serbia and Romania. Overall, companies benefited from improved economic conditions including stronger household spending and signs of recovery in the Eurozone, their main export market. The report analyzes insolvency trends and performances by sector in various CEE economies like Bulgaria.
While CEE economies experienced strong growth in 2017, business insolvencies still increased across the region. Companies did not have enough time to fully benefit from the economic recovery as growth is slowing. Insolvencies are expected to continue rising in 2018 and 2019 as supply constraints like labor shortages increase costs for businesses. Construction companies in particular struggled with high material costs and labor shortages, showing up in insolvency statistics. The economic expansion peak has passed and weaker growth ahead will make conditions more difficult for CEE companies.
The document summarizes key findings from an analysis of the top 500 companies in Central and Eastern Europe in 2016. It finds that while employment grew significantly in the region (+3.9%), overall turnover and profits declined slightly. The automotive industry surpassed oil and gas to become the largest sector. Economic growth in the region remained solid at around 3% despite a slowdown from 2015 levels. Unemployment rates reached record lows across most CEE countries.
Macroeconomic Developments Report. July 2013Latvijas Banka
In the first quarter of 2013, Latvia's exports of goods continued to grow faster than imports in both nominal and real terms, driven by Latvian exporters' competitiveness. However, as external demand contracted and the base effect took over, the annual growth rate of Latvian exports decelerated. Most of Latvia's major trade partners saw downward revisions to economic growth forecasts for 2013. While growth is still expected in countries like Estonia, Lithuania, and Russia, the pace is expected to slow. Contraction in the euro area and weak growth in the UK and other European countries poses risks to Latvia's export growth in the coming quarters.
Russia - sharp slowdown and protacted recoverySwedbank
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
1) The Latvian economy experienced a temporary slowdown in the first quarter of 2016, with GDP growth of 1.3% year-on-year but a decline of 0.1% quarter-on-quarter, driven by a large drop in construction output.
2) Exports declined in the first quarter, driven by decreases in machinery, electrical equipment, and re-exports, while import volumes also fell.
3) Retail trade growth was supported by rising incomes in 2015 but may slow in 2016 as wage growth moderates and the contribution from lower fuel prices diminishes. Income levels, lending, demographics, and consumer habits are more important determinants of retail trade in the long run than
- The Baltic Sea region experienced a steep economic decline in 2009, with GDP falling 5.9%. Growth is expected to return in 2010 and 2011 at rates of 2.6% and 3.1% respectively.
- The recovery is dependent on continued growth in emerging markets, which are currently the main drivers of the global economy. Risks to the outlook include turbulence in financial markets and the eurozone sovereign debt crisis potentially slowing demand.
- Structural reforms are still needed across the region to strengthen competitiveness and ensure sustainable long-term growth as countries deal with the effects of the crisis.
"Macroeconomic Developments Report", October 2013Latvijas Banka
The document provides a macroeconomic developments report for October 2013. It summarizes developments in Latvia's external sector and exports in the second quarter of 2013. Key points include:
- Latvia's exports continued to grow but at a slower annual rate due to weakening demand from major trade partners. Exports of base metals declined due to a factory closure.
- Imports declined in both volume and value as production and investment activity decreased. Imports of base metals and vehicles fell the most.
- Despite challenges, Latvia increased its share of world imports according to WTO data. The report examines economic conditions in Latvia's key trade partners.
Companies in Central and Eastern Europe saw insolvencies stabilize in 2014 with a minor 0.5% drop regionally on average. Insolvency levels varied between countries, rising sharply in Slovenia and Hungary but falling significantly in Serbia and Romania. Overall, companies benefited from improved economic conditions including stronger household spending and signs of recovery in the Eurozone, their main export market. The report analyzes insolvency trends and performances by sector in various CEE economies like Bulgaria.
"Highlights":
* Energy prices keep annual inflation below zero
* Manufacturing growth regains momentum
* Latvia's exports: a zigzag path maintained
"In Focus":
* Latvia's exports to euro area: developments after joining, autore: Daina Pelēce
Highlights:
* GDP growth at 2.6% in 2015
* Current account posted improvement
* Unemployment continues to decrease, but at a slower pace
In Focus:
Zero-based approach to government budgeting, Baiba Traidase
1) Estonia has attracted the most foreign direct investment as a percentage of GDP from euro area countries and other Baltic states since adopting the euro.
2) Latvia and Lithuania saw large drops in FDI, mainly due to restructuring at Swedbank.
3) Adopting the euro is expected to help Latvia attract more foreign investment by increasing credibility, though responsible fiscal policy is also important.
"Highlights":
* Healthy growth, but caution warranted
* Inflation growth decelerating
* Recovery of imports increased current account deficit
"In Focus":
* Does the financing from the EU structural funds improve the competitiveness of Latvian businesses?, autors: Oļegs Krasnopjorovs
Macroeconomic Developments Report, December 2017Latvijas Banka
The document provides an overview of macroeconomic developments in December 2017, including:
- External demand continued to grow, supported by robust global demand and growth among Latvia's main trade partners, though UK demand weakened due to Brexit uncertainties.
- The ECB maintained interest rates and asset purchase programs as inflation remained below target. Financial conditions remained accommodative globally.
- Latvia saw strong economic growth in 2017, driven by external demand, private consumption, and recovering investment inflows. Wage growth outpaced productivity, however, weakening competitiveness.
Latvijas Bankas "Monthly Newsletter", 10/2016Latvijas Banka
"Highlights":
* Substantial increase in high technology sectors
* Inflation is rising, but to a large extent owing to last year's developments
* External trade in August testifies to the power of Latvian cereal exports
"In Focus":
* #reformasLV or why Latvijas Banka cares about education and healthcare?, autors: Oļegs Krasnopjorovs
The Ukrainian economy recovered modestly by 2.3% in 2016, with a bumper agriculture harvest leading to stronger growth of 4.8 percent in the fourth quarter. Decisive reforms in the face of unprecedented shocks in 2014 and 2015 helped to stabilize confidence.
As a result, real GDP grew modestly by 2.3 percent in 2016 after contracting by a cumulative 16 percent in the previous two years. Signs of stronger growth of 4.8 percent (y-o-y) emerged in the fourth quarter of 2016. The recovery was supported by a bumper harvest, with agriculture growing by 6 percent in 2016 overall and 18.4 percent (y-o-y) in the fourth quarter.
The document summarizes a study on the economic transformation of Georgia from a post-Soviet economy to one experiencing major growth. It identifies three primary causes of Georgia's economic success: bureaucratic reform that made it easier to do business; a rise in foreign direct investment due to a more liberal investment environment; and a decrease in corruption through reforms to the legal system and tax code. The reforms implemented after Mikheil Saakashvili was elected in 2004, such as reducing red tape and firing corrupt police officers, played a key role in driving these changes. However, ongoing security and political stability issues pose risks to Georgia's continued economic progress.
From ELANA Trading: Macroeconomic and Market Outlook 2015 „Bulgaria: Back on ...ELANA Group
This research report offers a thorough view on the major macroeconomic trends in Bulgaria, looking also into all internal and external factors such as crisis in Russia and Ukraine, as well as Greece turmoil. The outlook includes a snapshot of the Bulgarian stock market and its movers & shakers as well as ELANA Trading analysts top picks.
Some analysts points:
- We are cautious for 2015, but looking for a GDP growth pick up in 2016.
- Factors to watch during in 2015 would be the first decisive moves for reforms of the new coalition government, Greece and the crisis in Ukraine.
- The recent capital market decline provides good buying opportunities in various sectors as banks and financial services, electrical equipment, pharmaceuticals, etc.
- Upcoming IT IPO to boost market vitality.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
The merchandise trade deficit widened in June, hitting yet another record of $3.6 billion, and much worse than expected. The gap was up from $3.5 billion in May (revised from $3.3 bln). Exports finally managed to rise after a nasty skid in the prior four months, when they dropped by a cumulative 10%.
But even that is not good news, as the modest 0.6% gain was entirely due to higher prices, as volumes fell a
hefty 1.4%.
Meantime, imports rose 0.8% and volumes were up 0.7%. This suggest that trade will drag even more heavily on overall growth in Q2, as we expect real net exports to chop more than 4 percentage points from GDP. We are quite comfortable being on the low side for Q2 GDP—we are now looking for a 2.0% drop in Q2, versus the BoC’s latest assumption of -1.0%, and today’s figures put the risks squarely to the downside.
We do look for some recovery in trade and overall growth in Q3, but suffice it to say that today’s brutal trade results cast some serious doubt on the Bank of Canada’s
The document provides an overview of the Polish economy. It highlights that Poland has one of the fastest growing economies in the EU, with GDP growing twice as fast as Western Europe. Poland offers a large domestic market of 38 million consumers and has received large allocations of EU funds to support its economic development. The strategic central location of Poland makes it well-positioned for trade within Europe and with Eastern countries. The key industries driving the Polish economy include automotive, aviation, electronics, machinery, and renewable energy. Special economic zones and industrial clusters further support business development.
After stabilization in 1993 Moldova maintained an unsustainable macroeconomic policy mix. The key problem was a lack of a fiscal adjustment, which resulted in large budget deficits. At the same time, the National Bank of Moldova (NBM) attempted to conduct a tight monetary policy. As a result, the exchange rate was appreciating, domestic absorption increasingly exceeded income and the country has been running large Current Account deficits. Moldova had an access to international financial markets and its indebtedness vs. the rest of the world was growing year by year at an alarming rate. Finally, in late 1998 Moldova suffered a balance of payments crisis, directly triggered by developments in Russia. Moldovan leu was devalued by about 70% and the current account improved.
The paper concentrates on the empirical dimension of the Moldovan financial crisis. It provides a case study of a) detecting and interpreting macroeconomic anomalies and b) identification of early warning signals of policy unsustainability and imminent change of financial market sentiment.
Authored by: Marek Jarocinski
Published in 2000
Highlights:
Annual inflation stands positive
Manufacturing growth has become stronger
Government debt servicing costs have been reduced
"In Focus":
What are the different effects of oil price developments on Latvia's inflation? autori: Oļegs Tkčevs and Andrejs Bessonovs
Highlights:
- Current account reflects the recovering investment activity
- Annual inflation continues hovering around 3%
- GDP growth exceeds expectations and leads to revised forecasts
In Focus:
- Latvia 2017: Back to growth and structural reforms, by Mārtiņš Grāvītis
"Highlights":
* Inflation stabilizes, main risk stems from oil price fluctuations
* Manufacturing retains high growth momentum
* Exports of goods increase volume and diversity
"In Focus":
* Tax reform, autors: Kārlis Vilerts
The document discusses the potential economic implications if the UK were to exit the European Union. It argues that the UK's economy may be less impacted than commonly believed for several reasons: 1) the largest EU economies are more dependent on trade with the UK than vice versa, 2) non-EU countries are increasingly investing in the UK and this could continue or increase after Brexit, and 3) leaving the EU would allow the UK to set its own immigration policies which could help reduce wage stagnation and income inequality. Overall, the document suggests the negative economic impacts of an EU exit may be overblown and the UK could thrive after removing restrictions from its European neighbors.
"Highlights":
* Manufacturing growth supported by nearly all sectors
* Exports regain pace
* Inflation boosted by global food prices growth while oil prices decrease
"In Focus":
* Comparison of the Baltic States' exports, author Daina Pelēce
Macroeconomic Developments Report. June 2016Latvijas Banka
This document provides a macroeconomic developments report for June 2016. It summarizes key developments in the external sector and exports, monetary policy and financial markets, domestic demand, aggregate supply, costs and prices, and the balance of payments for Latvia. It also includes forecasts for Latvia's GDP growth and inflation for 2016. Some of the main points covered include weaker-than-expected global economic growth in 2015, accommodative monetary policy decisions by the ECB, private consumption as the main driver of GDP growth in Latvia, and a revised downward GDP growth forecast for Latvia of approximately 2.0% in 2016.
The document discusses the economic consequences of Ukraine ratifying an Association Agreement with the EU. It finds that this will:
1) Positively impact Ukraine's financial accounts and domestic lending by intensifying capital inflows, but reforms are needed in banking and financial markets.
2) Have a longer-term positive effect on foreign direct investment by improving the court system, though more reforms are required to boost investor confidence.
3) Negatively impact Ukraine's trade balance in the short-term, 1-3 years, but this can be minimized by currency devaluation, improving goods quality standards, and integration plans with the EU.
Macroeconomic Developments Report. December 2015Latvijas Banka
Based on data from tLatvijas Banka, Central Statistical Bureau of Latvia, Ministry of Finance, and Financial and Capital Market Commission, this publication assesses developments of the external sector and exports, financial market, domestic demand and supply, prices and costs, and balance of payments, and provides forecasts for the economic development and inflation.
"Highlights":
* Economy faces temporary slowdown
* Inflation hovering around 0
* Current account back to normal
"In Focus":
* The new school bag of the 2017 budget contains homework, autors: Guntis Kalniņš
"Highlights":
* Energy prices keep annual inflation below zero
* Manufacturing growth regains momentum
* Latvia's exports: a zigzag path maintained
"In Focus":
* Latvia's exports to euro area: developments after joining, autore: Daina Pelēce
Highlights:
* GDP growth at 2.6% in 2015
* Current account posted improvement
* Unemployment continues to decrease, but at a slower pace
In Focus:
Zero-based approach to government budgeting, Baiba Traidase
1) Estonia has attracted the most foreign direct investment as a percentage of GDP from euro area countries and other Baltic states since adopting the euro.
2) Latvia and Lithuania saw large drops in FDI, mainly due to restructuring at Swedbank.
3) Adopting the euro is expected to help Latvia attract more foreign investment by increasing credibility, though responsible fiscal policy is also important.
"Highlights":
* Healthy growth, but caution warranted
* Inflation growth decelerating
* Recovery of imports increased current account deficit
"In Focus":
* Does the financing from the EU structural funds improve the competitiveness of Latvian businesses?, autors: Oļegs Krasnopjorovs
Macroeconomic Developments Report, December 2017Latvijas Banka
The document provides an overview of macroeconomic developments in December 2017, including:
- External demand continued to grow, supported by robust global demand and growth among Latvia's main trade partners, though UK demand weakened due to Brexit uncertainties.
- The ECB maintained interest rates and asset purchase programs as inflation remained below target. Financial conditions remained accommodative globally.
- Latvia saw strong economic growth in 2017, driven by external demand, private consumption, and recovering investment inflows. Wage growth outpaced productivity, however, weakening competitiveness.
Latvijas Bankas "Monthly Newsletter", 10/2016Latvijas Banka
"Highlights":
* Substantial increase in high technology sectors
* Inflation is rising, but to a large extent owing to last year's developments
* External trade in August testifies to the power of Latvian cereal exports
"In Focus":
* #reformasLV or why Latvijas Banka cares about education and healthcare?, autors: Oļegs Krasnopjorovs
The Ukrainian economy recovered modestly by 2.3% in 2016, with a bumper agriculture harvest leading to stronger growth of 4.8 percent in the fourth quarter. Decisive reforms in the face of unprecedented shocks in 2014 and 2015 helped to stabilize confidence.
As a result, real GDP grew modestly by 2.3 percent in 2016 after contracting by a cumulative 16 percent in the previous two years. Signs of stronger growth of 4.8 percent (y-o-y) emerged in the fourth quarter of 2016. The recovery was supported by a bumper harvest, with agriculture growing by 6 percent in 2016 overall and 18.4 percent (y-o-y) in the fourth quarter.
The document summarizes a study on the economic transformation of Georgia from a post-Soviet economy to one experiencing major growth. It identifies three primary causes of Georgia's economic success: bureaucratic reform that made it easier to do business; a rise in foreign direct investment due to a more liberal investment environment; and a decrease in corruption through reforms to the legal system and tax code. The reforms implemented after Mikheil Saakashvili was elected in 2004, such as reducing red tape and firing corrupt police officers, played a key role in driving these changes. However, ongoing security and political stability issues pose risks to Georgia's continued economic progress.
From ELANA Trading: Macroeconomic and Market Outlook 2015 „Bulgaria: Back on ...ELANA Group
This research report offers a thorough view on the major macroeconomic trends in Bulgaria, looking also into all internal and external factors such as crisis in Russia and Ukraine, as well as Greece turmoil. The outlook includes a snapshot of the Bulgarian stock market and its movers & shakers as well as ELANA Trading analysts top picks.
Some analysts points:
- We are cautious for 2015, but looking for a GDP growth pick up in 2016.
- Factors to watch during in 2015 would be the first decisive moves for reforms of the new coalition government, Greece and the crisis in Ukraine.
- The recent capital market decline provides good buying opportunities in various sectors as banks and financial services, electrical equipment, pharmaceuticals, etc.
- Upcoming IT IPO to boost market vitality.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
The merchandise trade deficit widened in June, hitting yet another record of $3.6 billion, and much worse than expected. The gap was up from $3.5 billion in May (revised from $3.3 bln). Exports finally managed to rise after a nasty skid in the prior four months, when they dropped by a cumulative 10%.
But even that is not good news, as the modest 0.6% gain was entirely due to higher prices, as volumes fell a
hefty 1.4%.
Meantime, imports rose 0.8% and volumes were up 0.7%. This suggest that trade will drag even more heavily on overall growth in Q2, as we expect real net exports to chop more than 4 percentage points from GDP. We are quite comfortable being on the low side for Q2 GDP—we are now looking for a 2.0% drop in Q2, versus the BoC’s latest assumption of -1.0%, and today’s figures put the risks squarely to the downside.
We do look for some recovery in trade and overall growth in Q3, but suffice it to say that today’s brutal trade results cast some serious doubt on the Bank of Canada’s
The document provides an overview of the Polish economy. It highlights that Poland has one of the fastest growing economies in the EU, with GDP growing twice as fast as Western Europe. Poland offers a large domestic market of 38 million consumers and has received large allocations of EU funds to support its economic development. The strategic central location of Poland makes it well-positioned for trade within Europe and with Eastern countries. The key industries driving the Polish economy include automotive, aviation, electronics, machinery, and renewable energy. Special economic zones and industrial clusters further support business development.
After stabilization in 1993 Moldova maintained an unsustainable macroeconomic policy mix. The key problem was a lack of a fiscal adjustment, which resulted in large budget deficits. At the same time, the National Bank of Moldova (NBM) attempted to conduct a tight monetary policy. As a result, the exchange rate was appreciating, domestic absorption increasingly exceeded income and the country has been running large Current Account deficits. Moldova had an access to international financial markets and its indebtedness vs. the rest of the world was growing year by year at an alarming rate. Finally, in late 1998 Moldova suffered a balance of payments crisis, directly triggered by developments in Russia. Moldovan leu was devalued by about 70% and the current account improved.
The paper concentrates on the empirical dimension of the Moldovan financial crisis. It provides a case study of a) detecting and interpreting macroeconomic anomalies and b) identification of early warning signals of policy unsustainability and imminent change of financial market sentiment.
Authored by: Marek Jarocinski
Published in 2000
Highlights:
Annual inflation stands positive
Manufacturing growth has become stronger
Government debt servicing costs have been reduced
"In Focus":
What are the different effects of oil price developments on Latvia's inflation? autori: Oļegs Tkčevs and Andrejs Bessonovs
Highlights:
- Current account reflects the recovering investment activity
- Annual inflation continues hovering around 3%
- GDP growth exceeds expectations and leads to revised forecasts
In Focus:
- Latvia 2017: Back to growth and structural reforms, by Mārtiņš Grāvītis
"Highlights":
* Inflation stabilizes, main risk stems from oil price fluctuations
* Manufacturing retains high growth momentum
* Exports of goods increase volume and diversity
"In Focus":
* Tax reform, autors: Kārlis Vilerts
The document discusses the potential economic implications if the UK were to exit the European Union. It argues that the UK's economy may be less impacted than commonly believed for several reasons: 1) the largest EU economies are more dependent on trade with the UK than vice versa, 2) non-EU countries are increasingly investing in the UK and this could continue or increase after Brexit, and 3) leaving the EU would allow the UK to set its own immigration policies which could help reduce wage stagnation and income inequality. Overall, the document suggests the negative economic impacts of an EU exit may be overblown and the UK could thrive after removing restrictions from its European neighbors.
"Highlights":
* Manufacturing growth supported by nearly all sectors
* Exports regain pace
* Inflation boosted by global food prices growth while oil prices decrease
"In Focus":
* Comparison of the Baltic States' exports, author Daina Pelēce
Macroeconomic Developments Report. June 2016Latvijas Banka
This document provides a macroeconomic developments report for June 2016. It summarizes key developments in the external sector and exports, monetary policy and financial markets, domestic demand, aggregate supply, costs and prices, and the balance of payments for Latvia. It also includes forecasts for Latvia's GDP growth and inflation for 2016. Some of the main points covered include weaker-than-expected global economic growth in 2015, accommodative monetary policy decisions by the ECB, private consumption as the main driver of GDP growth in Latvia, and a revised downward GDP growth forecast for Latvia of approximately 2.0% in 2016.
The document discusses the economic consequences of Ukraine ratifying an Association Agreement with the EU. It finds that this will:
1) Positively impact Ukraine's financial accounts and domestic lending by intensifying capital inflows, but reforms are needed in banking and financial markets.
2) Have a longer-term positive effect on foreign direct investment by improving the court system, though more reforms are required to boost investor confidence.
3) Negatively impact Ukraine's trade balance in the short-term, 1-3 years, but this can be minimized by currency devaluation, improving goods quality standards, and integration plans with the EU.
Macroeconomic Developments Report. December 2015Latvijas Banka
Based on data from tLatvijas Banka, Central Statistical Bureau of Latvia, Ministry of Finance, and Financial and Capital Market Commission, this publication assesses developments of the external sector and exports, financial market, domestic demand and supply, prices and costs, and balance of payments, and provides forecasts for the economic development and inflation.
"Highlights":
* Economy faces temporary slowdown
* Inflation hovering around 0
* Current account back to normal
"In Focus":
* The new school bag of the 2017 budget contains homework, autors: Guntis Kalniņš
Flash Report - Government Deficit - 6 April 2018OTP Bank Ltd.
2017-ben a kormányzat előzetes bejelentésének megfelelően 2% volt a költségvetés hiánya. Az erős bér- és fogyasztás-bővülés miatt gyorsan nőttek az adóbevételek. A kiadási oldalon a legnagyobb mértékben, 54%-kal a beruházások nőttek, illetve az év végi, diszkrecionális döntéseknek köszönhetően a dologi kiadások. A beruházások várhatóan átmeneti megugrása és az év végi diszkrecionális döntések nélküli egyenleg továbbra is egyensúly közeli. Az államadósság – amely immár az Exim Bank adatait is tartalmazza – a GDP 73.6%-ára mérséklődött az előző évi 76%-ról, dacára annak, hogy az EU-s projektek előfinanszírozása az eredmény-szemléletűnél érdemben magasabb pénzforgalmi deficitet eredményezett. Előretekintve a kockázatok – részben a választásokhoz kötődő bizonytalanság miatt – a deficit növekedése irányába mutatnak.
The document provides an economic outlook and forecasts for the Baltic countries of Estonia, Latvia, and Lithuania in 2009-2010. It finds that while private sector adjustments have been faster than expected, public sector adjustments still lag despite efforts. GDP is forecast to decline substantially in all three countries in 2009, with Latvia facing the steepest drop of around 17%. Deeper budget cuts are still needed in the public sectors of Estonia and Latvia to reduce budget deficits. Overall, a slow recovery is expected to begin in 2010, led initially by stabilizing exports, while domestic demand remains weak.
Despite GDP being flat in Q2, downside risks to growth still exist. Three key factors pose risks: (1) low FDI due to global risk aversion will impede growth, (2) government spending cuts to narrow the fiscal deficit will put pressure on the economy, and (3) weakening domestic demand from rising unemployment and limited lending will negatively impact private consumption. Flat GDP also came from a large drop in investments and consumption. Surveys were mixed with consumer confidence improving but business climate declining. The current account deficit is adjusting due to falling imports outpacing exports.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
This document summarizes the 2018 Country Report for Romania published by the European Commission. It finds that while Romania experienced strong economic growth in 2017, the growth has been driven mainly by consumption and risks creating imbalances. Inequality and poverty remain high despite growth. Some reforms were reversed in 2017 and others stalled. The report recommends Romania focus on ensuring fiscal sustainability, strengthening tax collection, improving education and skills training, and maintaining progress on reforms to support higher, more inclusive growth.
Forecast of development of ukrainian economy in 2017Anatoliy Amelin
The Ukrainian economy showed moderate growth in 2016, with GDP expected to increase 1.1% for the year. Inflation eased to an expected 12% for 2016. Exports stagnated due to relatively low commodity prices. Imports of goods continued to decline, while investment imports increased, signaling positive trends. However, exports declined faster than imports, resulting in a negative trade balance that is expected to widen to $4.9 billion, or 5% of GDP. Overall the recovery remains weak, with investment and domestic demand still low. Continued reforms are needed to strengthen energy independence and improve competitiveness.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
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The results of elections held in eastern Europe this year do not indicate any clear shifts in regional trends or direction. Bulgaria and Romania are set to join the EU on January 1st 2007 (at most there could have been a one-year delay until January 2008), but this will be under the strictest conditions ever applied to new members. Acrimonious negotiations on the final status of Kosovo appear to be grinding towards an impasse and possible crisis. It is difficult to predict the effects on developments in the wider region—not only in restive and resentful Serbia, but also in Bosnia and Hercegovina (BiH), Macedonia and possibly further afield. This is occurring when the EU's most effective instrument for influencing developments in the region—the offer of EU membership—has been seriously weakened by the anti-enlargement mood sweeping western Europe.
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he recent data flow in Spain has been encouraging. Despite protracted weakness in bank lending and persistently high bank lending rates, the Spanish economy has recorded significant progress since mid-2013. This consideration prompts us to evaluate the cyclical dynamics in Spain as we enter the new year. In our view, it can be cautiously concluded that the Spanish economy has healed sufficiently well to grow at a decent pace in 2014.
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- The economic recovery has been faster than expected, leading to higher than planned budget revenues in 2010. This means the budget deficit will be lower than targeted at 1.3% of GDP rather than 2.8%.
- For 2011, budget revenues are expected to increase 2% while expenditures rise 5%. This would result in a budget deficit of 1.6% of GDP, still below the 2% limit set in Estonia's budget strategy. Estonia is in a strong fiscal position compared to
After two years of recession, Russia's economy is projected to return to growth in 2017 as higher wages boost consumption and lower interest rates support investment. However, structural issues continue to hinder diversification, and the recovery remains dependent on stable oil prices. Fiscal and monetary policy should be further eased to support the recovery, though fiscal space is limited without economic reforms. The strength of the recovery will be constrained by a lack of structural reforms and poor business climate inhibiting diversification from oil.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
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Central and Eastern Europe September 17
1. FOCUS
Central and Eastern Europe:
Less business insolvencies despite
temporary headwinds in the
construction sector
COFACE ECONOMIC
PUBLICATIONS
SEPTEMBER 2017
By Grzegorz Sielewicz
Economist - Warsaw
ALL OTHER GROUP ECONOMIC PUBLICATIONS ARE AVAILABLE ON:
http://www.coface.com/Economic-Studies
D
espite some slowdown last year, average GDP growth remained at a solid level
of 2.9% in Central and Eastern Europe. Economies have been benefiting from the
favourable situation on the labour market, with contracting unemployment rates
and rising wages. The improving macroeconomic environment has had positive
effects on business. Company insolvencies dropped by 14% in 2015 and a further
6% in 2016. Over the course of last year, 6 entities per 1,000 became insolvent. The regional
breakdown reveals a wide variety of dynamics, ranging from a fall of 35.6% in proceedings in
Bulgaria, through to a minor increase of 2.6% in Poland and a surge of 56.9% in Hungary. Region-
wide however, the downturn in construction activities led to companies within this sector being
widely represented in insolvency statistics. Construction consequently took first place in the
ranking of flop sectors in the CEE region.
Coface forecasts that company insolvencies in the CEE region will decrease by 3.9% in 2017
and by 2.3% in 2018. The acceleration in GDP growth and the rebound in investment activity
bring further positive signals for businesses. A new flow of infrastructural projects, stable
contributions from household consumption and the exploration of foreign markets will all be
economic supporters. Nevertheless, businesses could experience some challenges, subject to
the whims of the global economy and political uncertainties. The latter include the eventual
negative consequences of Brexit and uncertainties in Western Europe, with unclear election
results in Italy. In addition, there have been local political issues, as seen in the Czech Republic,
Poland and Romania. The rebound in investments should be particularly beneficial for sectors
such as construction, transport and the manufacturing of machinery, construction equipment
and construction materials. Nevertheless, labour shortages will remain an obstacle for many
expanding businesses.
2. 2 COFACE ECONOMIC PUBLICATIONS
FOCUS
CENTRAL AND EASTERN EUROPE: LESS
BUSINESS INSOLVENCIES DESPITE TEMPORARY
HEADWINDS IN THE CONSTRUCTION SECTOR
1 - As the country’s economy is nearly as big as the entire rest of CEE countries analysed in the past, the regional GDP-weighted average is incomparable with previous statistics
2 - http://www.telegram.hr/politika-kriminal/10-promjena-u-stecajnom-zakonu-koji-ce-neke-tvrtke-automatski-slati-u-stecaj/3
3 - Baker McKenzie, Global Restructuring & Insolvency Guide, Hungary
Despite a general improvement, insolvencies still
remain above the pre-crisis levels of 2008 in most
countries. Only Romania and Slovakia enjoy lower
levels of company insolvencies than before 2008.
Nominal insolvency figures vary between countries,
as they were not only affected by their economic
situations but also by the definitions of insolvency in
specific countries (with amendments to insolvency
laws, or more widespread use of insolvency
procedures). This edition of the Coface insolvency
report1
also includes Russia for the first time.
Diversified dynamics of company
insolvencies among CEE countries
Insolvency figures varied between countries, as they
were not only affected by their economic situations
but also by the definitions of insolvency in specific
countries (with amendments to insolvency laws, or
more widespread use of insolvency procedures).
This was the case in Croatia, where a significant
increase in insolvency proceedings was recorded
last year. This trend began at the end of 2012, when
a new legal form entitled “pre-insolvency settlement
procedure” (a judicial composition) was introduced.
A new Bankruptcy Law then entered into force in
September 2015 which strongly affected the 2016
insolvency figures. Under the new law, the National
Financial Agency (FINA) is obliged to start bankruptcy
proceedings for any company whose accounts
have been blocked for more than 120 days. Before
introducing this crucial law, there were around 14,000
companies in Croatia with no employees, which owed
almost HRK 15 billion. Since the entry into force of the
new law, all of these companies with accounts blocked
for 120 days or more automatically become bankrupt,
with the FINA opening the procedure within 8 days.
More precisely, the requirement to start bankruptcy
proceedings is not only a blockage of more than 120
days, but also the fact that a company has not paid
its workers for three consecutive months. Bankruptcy
proceedings are also initiated in cases of companies
having claims higher than debts2
. As a result of
‘cleaning’ registers of these dormant companies, the
level of bankruptcies in Croatia surged by 6.7% last
year - the highest ratio in the entire CEE region.
An increased number of company insolvencies was
recorded in 6 out of the 14 CEE countries covered by
the study. In Hungary they more than doubled in 2016
compared to the previous year. This was mainly due to
a higher number of ex officio company cancellations,
which were hardly covered by the 2015 statistics.
Under Hungary’s insolvency laws, if the parties fail
to conclude a debt restructuring agreement, or if the
arrangement is not in compliance with the statutory
requirements, the ex officio tribunal will dismiss the
bankruptcy proceedings and consequently declare
the debtor insolvent in liquidation proceedings
(during which time the tribunal is obliged to order the
liquidation of the debtor3
). In 2016 the number of ex
officio cancellations was comparable to the number
of winding-up processes announced in Hungary.
Winding-up as a procedure for company liquidation
is highly formalised. The process usually lasts for
between 6 to 12 months, in order to ensure that the
company is closed in the correct manner. A surge
in company insolvencies was also experienced in
Lithuania last year. Similar to as in 2015, the statistics
were further affected by the State Tax Inspectorate
and Social Fund’s process of “cleaning” the market
of companies which were theoretically insolvent long
ago. Contrary to the above-mentioned countries, the
challenging situation of the Ukrainian economy and
the war conflict in Eastern part of the country have
Despite the slowdown, the
economic environment remains
supportive for corporates
After peaking to 3.5% in 2015 (its highest post-crisis
level), CEE average growth dropped to 2.9% in 2016.
Although most CEE countries joined the European
Union in the previous decade, their cohesion with
wealthier Western European economies is still in
progress and they widely use co-financing from the
EU budget for investments. This funding is chiefly
aimed at reducing economic and social disparities
and promoting sustainable development through
infrastructure and environmental projects. Although it
was therefore already expected that the GDP growth
of CEE countries would be affected by switching to
the new EU budget and adopting local regulations,
the slowdown was deeper and more extended than
anticipated. Nevertheless, the fact that economic
expansion still shows a solid pace of development, at
an annual level of around 3%, provides a supportive
environment for corporates in terms of the general
macroeconomic perspective. This effect started to
become more visible in 2014, particularly with regards
to microeconomic activity. 2016 showed a continuing
decrease in the number of company insolvencies in
the CEE region, which dropped by 6% in 2016 as a
GDP-weighted average. Nevertheless, the regional
breakdown indicates a wide variety of dynamics,
ranging from a 35.6% decrease in proceedings in
Romania, through to a minor increase of 2.6%
in Poland and a surge of 56.9% in Hungary (chart 1).
CHART 2
Evolutions in insolvencies in the CEE region since 2008 (2008=100)
Source:Coface
CHART 1
Insolvencies in Central Europe
Source:Coface
0
100
200
300
400
500 Poland
Czech Republic
Romania
Bulgaria
Slovenia
Slovakia
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
F
2018
F
61
60
70
Manufacture of textile products,
clothing and footwear
Construction
Hotels and restaurants
-40
-30
-20
-10
0
10
20
30
40
JA
N
15
JU
N
E
15
N
O
V
15
A
PRIL
16
SEPT
16
FEB
17
Slovakia
Poland
Czech Republic
Hungary
EU 28
Romania
Forecast
Country
Bulgaria
Croatia
Czech Rep.
Estonia
Hungary
Latvia
Lithuania
Poland
Romania
Russia
Serbia
Slovakia
Slovenia
Ukraine
GDP weighted average
Total
insolvencies
2016
381
14 495
11 800
335
22 671
727
2 684
760
8 053
10 527
5 803
345
647
1 570
Dynamics
2016/2015
Insolvency
rate*
2016
Forecast
Dynamics
2017 2018
-35,6%
**
-15,0%
-10,9%
56,9%
-12,4%
35,2%
2,6%
-20,8%
-12,6%
13,8%
-22,6%
-10,9%
22,2%
-6,0%
0,10%
6,73%
0,80%
0,16%
4,49%
0,30%
2,58%
0,04%
1,71%
0,22%
4,43%
0,06%
0,32%
0,26%
0,63%
-4,7%
4,3%
-3,8%
-2,7%
3,4%
-5,9%
-4,0%
6,8%
-2,7%
-10,1%
2,0%
-2,0%
-3,6%
5,4%
-3,9%
-2,8%
-0,2%
-3,2%
-4,6%
-2,2%
-0,9%
-1,6%
-0,7%
-1,8%
-3,2%
-0,9%
-0,6%
-1,0%
-2,3%
-2,3%
* Share of insolvencies in the total number of active companies
** Due to law changes dynamics 2015/2016 are not comparable
3. CENTRAL AND EASTERN EUROPE: LESS
BUSINESS INSOLVENCIES DESPITE TEMPORARY
HEADWINDS IN THE CONSTRUCTION SECTOR
COFACE ECONOMIC PUBLICATIONS
FOCUS
3
4 - The analysis covers the initial stage of bankruptcies in Russia i.e. ‘supervision’ which is analogous to preliminary insolvency proceedings under German law (Beiten Burkhardt, Bankruptcy in Russia)
5 - Insolvencies in Romania 2016, Coface
entitled to use various proceedings for restructuring.
These include the procedure of approval of a plan after
creditors’ votes, accelerated arrangement procedures,
ordinary arrangement procedures and rehabilitation
proceedings. Over the last year, restructuring procedures
have gained popularity with companies suffering from
liquidity problems. Whereas during the initial months of
2016, businesses were only just becoming familiar with
the new regulations, restructuration procedures started
to become more frequent over the rest of the year. The
number of restructuration proceedings has been rising
and reached a 27% share in total proceedings at the end
of 2016. The number of insolvencies, on the other hand,
has been decreasing. At the same time, although changes
in legislation made the total number of proceedings
higher than a year before, Poland still recorded the lowest
insolvency rate in the CEE region.
led to a difficult environment for businesses. Although
the economy recorded a positive growth rate last
year, company insolvencies jumped by 20.2% in 2016.
Russia, which is covered by our study for the first time,
recorded a 12.6% fall in insolvencies4
. The economy
has already rebounded from a recession, with positive
signs shown by various economic indicators. The
macroeconomic improvement transferred relatively
quickly to the business side, which previously suffered
from an increase of nearly 9% in bankruptcies in 2015.
Nevertheless, the process of economic recovery has
been gradual and businesses still face challenges.
Last year over 2 active companies per 1,000 became
bankrupt. The main reasons were the decline in
consumption following the decrease in real household
income, a rise in loan arrears of large and medium
enterprises, the stagnation of fixed investments and
relatively high interest rates (although these have
somewhat stabilised compared to previous levels).
Among the 14 CEE countries covered by our analysis,
eight recorded a slump in insolvencies last year. The
strongest fall, of 35.6%, was experienced in Bulgaria
where the pharmaceuticals, IT and education sectors
hardly recorded any insolvencies. Nevertheless,
although company insolvencies dropped last year,
companyindebtednessremainedhigh.Non-performing
loans are a concern for Bulgarian banks and for
companies suffering from difficulties in collecting
receivables from some of their counterparties.
Companies from the trade sector account for nearly
a fifth of all cases of insolvencies, followed by
construction and real estate firms with 15%. The main
reasons for these financial difficulties include high
levels of indebtedness, poor liquidity management and
fewer funding opportunities.
Last year showed a continued period of improvement
for Romanian businesses. Whereas just three years
previously there were nearly 28,000 insolvencies in
Romania, this figure dropped to 8,053 in 2016.
Statistics have already returned to pre-crisis levels. The
sizeable contraction of 20.8% in company insolvencies
does, however, mask some specifics. This significant
decrease is recorded against the backdrop of a base
effect and the high weight of insolvencies among very
small companies. Among these insolvencies, 84% were
companies which were not operational (with zero
turnover recorded in 2015) or had revenues of less than
EUR 100,000 in 2015. Nevertheless, 2016 also saw the
start of a major decrease in insolvencies among large
companies. Insolvencies of companies with a yearly
turnover exceeding EUR 1 million dropped by 43%5
.
In a sectorial split, construction and the manufacturing
of textile products, clothing and footwear, as well as
hotels and restaurants, recorded the highest insolvency
rates (chart 3).
In Poland, which recorded a slight increase of 2.6%
in proceedings, insolvency statistics are affected by
legal changes that were implemented last year. On 1st
January 2016, separate laws were introduced to cover
insolvenciesandtherestructuringofcompanieswhichare
experiencing payment problems. The aim of introducing
these updated regulations was to encourage greater
use of insolvency procedures – especially as a recovery
tool for companies facing temporary liquidity problems.
In the past, Polish companies were reluctant to use
insolvency proceedings and the share of judicial
compositions accounted for only one sixth of all
announced insolvencies. The main goal of the revised
legislation is to enable debtors to restructure their
businesses and thereby prevent their liquidation. This
support for the continuity of businesses should help to
preserve jobs and allow the uninterrupted execution
of contracts. Companies in financial difficulties are
CHART 3
Romania: sectors with the highest number of insolvencies
per 1,000 active companies
Source: Insolvencies in Romania 2016, Coface
0
100
200
300
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
F
2018
F
61
40
37
35
33 33 32
30
27 26
0
10
20
30
40
50
60
70
Manufacture of textile products,
clothing and footwear
Construction
Hotels and restaurants
Waste draining and removal;
sanitation
Food and beverage industry
Recreational, cultural and sports
activities
Manufacture and chemical
substances and products
Metallurgic industry
Wholesale and distribution
Agriculture
CHART 4
Top and flop sectors in CEE
Source:Coface
TOP 5 SECTORS FLOP 5 SECTORS
Pharma
IT
Education
Manufacturing of machinery
Financial services
Construction
Metals
Wholesale
Transports
Retail
Construction impacted by weak
investment activity
A sectorial split shows that there were some sectors
that enjoyed an improvement last year, while others
experienced challenges with liquidity. This varied
across countries, although there were some common
trends across the whole region. The construction
sector was clearly the one that experienced the
most difficult business environment. As previously
mentioned, CEE economies were impacted by the
switching to the new EU budget and lower investments
last year, with a slower pace of GDP growth. In terms
of construction output, most countries recorded a
significant slump in activity which led to deteriorated
liquidity situationsfor construction companies. In some
countries, including Estonia, Hungary and Russia,
insolvencies of construction companies exceeded
20% of the total number of proceedings, while they
also accounted for significant shares in other countries.
Towards the year-end, the construction sector began
to rebound in line with the debut of additional projects
from the new EU budget.
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