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The comparative economic development of Serbia and Kosovo (Martin Ertl)

17 Sep

Martin Ertl

Serbia made comparably more economic progress than Kosovo, but both countries underperform with respect to income convergence in Eastern Europe.Recently, both countries had a solid recovery. Serbia‘s recovery is boosted by construction. The current GDP growth rate is likely not sustainable but the macro environment remains sound.Foreign remittances, rising wages and lending growth support consumption in Kosovo.Central and Eastern Europe (CEE) makes substantial progress in closing the income gap relative to Western Europe. Figure 1 shows the level of per capita gross domestic product (GDP p. c.) in 2000 and the percentage change between 2000 and 2017. Countries with lower GDP p. c. exhibit higher growth rates. After the dissolution of the Socialist Federal Republic of Yugoslavia in the 1990s, some of...     » Weiterlesen


What should we expect finance ministers to discuss at the Eurogroup meeting this w...

03 Sep

Martin Ertl

The upcoming Eurogroup meeting in Vienna intends to discuss inefficiencies in Euro Area labor and product markets to boost productivity.Productivity developments have been quite heterogeneous with adverse consequences for labor markets.Unemployment is high in international comparison and structurally weak labor markets remain a vital policy concern in some Euro Area member states.Labor market reforms have already been initiated targeting youth unemployment, long-term unemployment and labor market segmentation. However, effective implementation needs to be further strengthened.Euro Area economic and finance ministers will meet in Vienna this Friday, ahead of the informal EU Ecofin meeting, to discuss “policies geared at strengthening longer-term growth and employment prospects” [1]. More specifi...     » Weiterlesen


Russia’s economic resilience against sanctions (Martin Ertl)

28 Aug

Martin Ertl

The Russian economy weathers financial sanctions amid macroeconomic stability supported by prudent fiscal and monetary policy.External debt is well covered by foreign currency reserves.The equilibrium real ruble exchange rate has been determined by the terms-of-trade due to oil price fluctuations. Recently, US sanctions might have loosened the exchange rate co-movement with the price of oil.In June, Russian government debt held by non-residents (OFZ) amounted to 2 trillion rubles (25.6 bn EUR) or 28 % total outstanding ruble-denominated government debt. The share of government debt held by non-residents has been declining (34 % in January). The total outstanding nominal of Eurobonds (securities issued in hard currency in the international bond markets) amounts to 31.4 bn EUR with 2.2 bn repayable until end...     » Weiterlesen


Turkey: A typical emerging market crisis? (Martin Ertl)

21 Aug

Martin Ertl

Political tensions with the US, lack of central bank independence and structural macro-economic vulnerabilities have contributed to a sell-off of the Turkish Lira.Low levels of reserve adequacy in combination with a structural current account deficit has made Turkey vulnerable to financial shocks.This combination is also present in South Africa and Ukraine, while the latter is already recovering from an emerging market crisis.During the last two weeks, the Turkish Lira has depreciated by 17 % (Friday-to-Friday) against the USD. Since the beginning of the year the Turkish currency has even lost more than 40 % of its value (Figure 1). The recent sell-off is based on a combination of macroeconomic vulnerabilities, financial markets’ questioning the central bank’s independence and political tension...     » Weiterlesen


CEE monetary policy developments (Martin Ertl)

14 Aug

Martin Ertl

Romania: The National Bank of Romania has, surprisingly, signaled a near end to its rate hiking cycle in spite of inflation above target.Serbia: With economic growth accelerating and inflation contained, the National Bank of Serbia has no need to change its monetary policy stance.Romania In no other European Union member state, inflation is as high as in Romania. While for the whole European Union, Eurostat’s harmonized consumer price index (HICP) increased by 2.0 % in June, inflation was at 4.7 % in Romania. Using the domestic consumer price index, inflation was even higher at 5.4 %, although it decreased to 4.6 % in July. In spite of high inflation, the National Bank of Romania (NBR), has decided to keep monetary policy interest rates unchanged during the Board’s meeting on August 6. The mone...     » Weiterlesen

Martin Ertl

Chief Economist, UNIQA Capital Markets GmbH

>> http://uniqagroup.com/gruppe/