EEMEA Economic Weekly Ukraine: elections and Russia’s response

BofA Merrill Lynch Global Research - Sabado, 24 de Mayo

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Things to Watch Next Week Key highlights in EEMEA next week will be on rates decisions in Israel, Hungary and Egypt along with GDP results in South Africa, Poland and Croatia. The BoI is likely to keep the rate at 0.75% this year with a first hike in 1Q 2015, as inflation expectations are well-anchored and inflation is likely to accelerate only later this year. We expect another 10bp cut from the NBH as inflation keeps on surprising on the low side and investor sentiment is positive. In South Africa we expect GDP in 1Q to slow sharply from the +3.8% recorded in 4Q given the -6.9% qoq slump in mining output over the quarter due to the platinum strike. We forecast a sharp V-shaped recovery of 2.8% this year and 3.8% next year, anticipating that deficit constraints imposed by the EU Commission limit the scope to maneuver in 2014. Also watch out for the April unemployment rate in Poland and PPI in South Africa. 

Ukraine in Focus: elections and Russia's response 

Ukraine's presidential elections are due to take place on May 25, and Kiev and the West are likely to recognize them. The latest opinion polls indicate that Petro Poroshenko has a good chance of winning in the first round. It is likely that Russia will recognize the presidential elections, decreasing risks of further pressure from the West.
 (V. Khramov, V. Osakovskiy; page 2)

News and Views 

Amongst the macro data published on Thursday, investment came in stronger than expected with the decline easing to just -2.7% yoy (BofAML and consensus -5% yoy) in Russia. The CBR on Thursday cut its daily intervention limits within the RUB trading corridor by $100m. The CBT cut its main policy rate by 50bp to 9.5%, surprising analyst expectations of a hold at 10%. The ON deposit and lending rates were left unchanged at 8% and 12%, respectively in Turkey. Meanwhile, The World Bank approved three projects totalling $1.48bn for Ukraine, including $750mn of budget support.
  (page 5)

Today's Market Movers 

There are no major data releases in EEMEA countries. 

Data releases, key events
EST	Country	Data/Event	For	BofAMLe	Cons.	Previous
-no major data releases-
Source: BofA Merrill Lynch Global Research, Bloomberg

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