Regional assets broadly rebound from February’s sell-off

Regional Economics and Market Strategy Monthly (Wednesday, March 14, 2018)

Regional assets broadly rebound from February’s sell-off

REGIONAL MACROECONOMIC & MARKET DEVELOPMENTS & OUTLOOK

• Q4 national accounts releases more or less in line with expectations. Regional growth prospects still look very good in 2018
• Real disposable incomes are expected to continue rising albeit at a lower speed compared to last year, thereby providing support to private consumption
• The rise of investments is crucial for the medium-term growth prospects of the region
• Different inflation paths allow for divergent regional Central Banks’ monetary policies
• Regional stock markets mostly recoup some losses
• Regional currencies remain little changed with idiosyncratic factors mostly at play
• Local currency sovereign bonds mostly weakened over recent weeks; FX denominated T-bonds retained YTD gains
• EM asset prospects remain positive but risks lie ahead

COUNTRY FOCUS

• Bulgaria: Investments performance is key to a more balanced growth path in 2018
• Cyprus: Presidential elections results signal policy continuity
• Romania: Elevated inflationary pressures amid lower growth  
• Serbia: Real GDP growth to pick up this year after supply-side shocks slowdown in 2017

EM assets recover some ground after February’s sell-off

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