Key Events In EMEA And Latam Next Week - Saturday, Feb. 29

Expect the Polish central bank to keep rates on hold next week while PMI readings in Hungary and the Czech Republic are likely to be affected by the coronavirus outbreak in Europe.

Poland's central bank to stay put

We expect Poland's central bank to remain on hold and rule out the possibility of a rate hike in the coming months. The new inflation projection should confirm that CPI is likely to hover above 4% in the first quarter and return towards the upper boundary of the Bank's target in the second half of 2020. In our opinion, the central bank is unlikely to indicate that CPI should exceed the target for the whole of 2020 – we think such a scenario as likely.

The Bank is likely to highlight the downward risk to its GDP growth forecast. We expect 3% year-on-year growth in 2020. The central bank inflation projection should probably present a more upbeat picture.

We expect a modest pick-up from 47.4 to 47.8 points in the new PMI index for February, following better sentiment in Germany and other eurozone countries. But we think this rise is temporary as the coronavirus outbreak threatens economic growth in Europe.

Czech Republic: Manufacturing PMI to head higher

February manufacturing PMI might head higher, but partially due to a similar reason as in Germany - the delayed release (due to coronavirus) is positive in the PMI methodology.

Real wages are likely to slow down further, partially due to higher inflation in 4Q19 compared to the previous quarter (3.0% vs 2.8%), and partially due to weaker nominal wage growth in 4Q. As such, we expect 3.2% YoY growth after 4.0% in 3Q19, while the central bank expects 4.2% growth, mainly due to an acceleration in non-market segment wages.

Hungary: PMI to drop further

We expect Hungarian PMI to drop further reflecting concerns about supply chain issues and the continued drop in the level of orders.

Industrial production in Hungary is expected to improve on a monthly basis in January, but output is likely to remain lower than a year ago along with weakening consumer confidence. We also expect retail sales growth to continue their slide but still remain sound.

January data won’t tell us the whole story about supply chain disruptions, travel bans and the like, so it might paint a better picture compared to expected 1Q performances.

Turkey: Inflation creeps up on lira weakness

We expect annual inflation to continue creeping upwards in February to 12.5% (0.5% month on month) from 12.2% in January, given the recent currency weakness while the drop in oil prices should bring some relief. 

EMEA and Latam Economic Calendar

Source: ING, Bloomberg