Regional Economics and Market Strategy Monthly (January, 2016)

Regional economies well positioned to withstand increased EM headwinds in 2016

REGIONAL MACROECONOMIC DEVELOPMENTS & OUTLOOK

• Region well positioned to withstand increased headwinds in the EM space this year
• Sustained low world energy prices provide a positive, albeit probably smaller than last year, boost on growth momentum in 2016
• Downside risks from higher US rates and Chinese slowdown relatively limited-Political instability, key risk as a result of the heavy election calendar 

• Regional assets broadly kick off the year on a negative footing amid heightened global risk aversion
• In line with deteriorating risk sentiment,  regional currencies came under renewed pressure in January
• Local-currency denominated government bonds have retained a relatively firm tone on low oil prices, benign inflation pressures and accommodative Central Bank monetary policies

• Bulgaria: Support for multi-party government wanes in parliament
• Cyprus: Poised for a clean exit from the program
• Romania: Further easing through MRRs
• Serbia: Snap general elections ahead

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REGIONAL MONTHLY JANUARY 2016