Key Events In EMEA - Saturday, June 3

By Muhammet Mercan & Peter Virovacz of ING Economics

Saturday, June 3, 2023 4:00 AM EDT

Annual inflation in Turkey will likely decline further in May due to the policy promised by Tayyip Erdogan of making gas free for Turkish households in May. For Hungary's May inflation print, we expect core inflation to remain strong, coming in at around 0.8% on a monthly basis, while headline inflation is around 0.1%.

(Click on image to enlarge)

Shutterstock

Turkey: Inflation trending downwards due to election policy

Annual inflation, which maintained its downtrend to 43.7% in April with large base effects, is likely to decline further in May to 39.3% (-0.1% on a monthly basis). This is because the Turkish Statistical Institute (TurkStat) said it would reflect the impact of the government’s decision to provide natural gas free of charge to households in May in its inflation calculations. TurkStat’s practice is in line with Eurostat guidelines, according to its statement.

However, the outlook is quite uncertain for the rest of 2023, as a lira adjustment post-election and potential adjustments in wages and administered prices are likely to weigh on the inflation momentum.

Hungary: Annual headline and core readings flirting with 22% and 23% levels

Next week is set to be a busy one in Hungary. We are going to see the first set of hard data regarding second-quarter economic activity. We expect both retail sales and industrial production to contract on a yearly basis as high inflation and high interest rates are suffocating domestic demand. The only silver lining in industry is the export-oriented sectors like car and battery manufacturing.

We see some better budgetary figures in May as the heating season has ended and this might reduce the expenditure side pressure arising from energy bills. The relatively small monthly deficit would mean that this year’s budget moves roughly in parallel with last year’s deficit accumulation. The even better news could be if the trade balance posts yet another monthly surplus in April, as we expect.

The highlight of the busy week will be the May inflation print. Seeing the downside surprises across Europe, we wouldn’t be shocked to see something similar in Hungary. We expect the month-on-month headline inflation to come in at around 0.1% mainly on easing price pressures in food, fuel and durables. Services inflation, however, will remain strong, thus core inflation on a monthly basis will stay high around 0.8%. But thanks to base effects, the headline and core readings will flirt with 22% and 23% levels, respectively, a significant detachment from the peak reached in the first quarter.

Key events in EMEA next week

(Click on image to enlarge)

Source: Refinitiv, ING

More By This Author:

The Commodities Feed: Debt Ceiling Deal Helps To Improve Sentiment
What To Watch For In Friday’s US Jobs Report
Asia Rebound Could Be Weaker And Later

Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...

Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any particular user's investment objectives, financial situation, or means. ING forms part of ING Group (being for this purpose ING Group NV and its subsidiary and affiliated companies). The information in the publication is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Reasonable care has been taken to ensure that this publication is not untrue or misleading when published, but ING does not represent that it is accurate or complete. ING does not accept any liability for any direct, indirect or consequential loss arising from any use of this publication. Unless otherwise stated, any views, forecasts, or estimates are solely those of the author(s), as of the date of the publication and are subject to change without notice.

The distribution of this publication may be restricted by law or regulation in different jurisdictions and persons into whose possession this publication comes should inform themselves about, and observe, such restrictions.

Copyright and database rights protection exists in this report and it may not be reproduced, distributed or published by any person for any purpose without the prior express consent of ING. All rights are reserved. ING Bank N.V. is authorised by the Dutch Central Bank and supervised by the European Central Bank (ECB), the Dutch Central Bank (DNB) and the Dutch Authority for the Financial Markets (AFM). ING Bank N.V. is incorporated in the Netherlands (Trade Register no. 33031431 Amsterdam). In the United Kingdom this information is approved and/or communicated by ING Bank N.V., London Branch. ING Bank N.V., London Branch is deemed authorised by the Prudential Regulation Authority and is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. The nature and extent of consumer protections may differ from those for firms based in the UK. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.. ING Bank N.V., London branch is registered in England (Registration number BR000341) at 8-10 Moorgate, London EC2 6DA. For US Investors: Any person wishing to discuss this report or effect transactions in any security discussed herein should contact ING Financial Markets LLC, which is a member of the NYSE, FINRA and SIPC and part of ING, and which has accepted responsibility for the distribution of this report in the United States under applicable requirements.

less

How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.