Key events in EMEA and Latam next week

The fourth-quarter growth slowdown is likely to be pronounced as tighter external and internal financial conditions weigh on consumption and investment, though strong net exports should partially offset the contraction in domestic demand. We expect -3.0% year-on-year GDP in 4Q18, translating into 2.5% for the whole year.

We expect CPI to inch up by 0.8% month-on-month in February, pushing the year-on-year reading to 3.8% from 3.3% previously. The Romanian leu has weakened by 0.9% on average versus the euro (relative to January), which should be reflected immediately in prices linked to the single currency, like phone bills. Adding to upside pressures are higher oil prices and companies passing on sectorial taxes - enacted in January. We also expect core inflation to increase by 0.2 percentage points to 2.7% year-on-year.

January CPI surprised on the upside, but unless volatile food prices accelerate (again) above expectations, we should see February's headline inflation around 2.6% YoY - close to the Czech National Bank's (CNB's) estimate.

Retail sales could disappoint due to a high base effect from January 2018 and subdued cars sales, which saw a double-digit fall in January. Also, car production remained 11.0% below that of January 2018, meaning that an improvement in industrial production is unlikely to materialise and the year-on-year growth rate will likely remain close to zero.

We expect a CPI recovery from 0.9% to 1.3% YoY in February, slightly above the market consensus (1.2%). The higher reading is driven mainly by food prices, which should add 0.3 percentage points to the headline figure. We also expect core inflation to increase slightly from 0.9% to 1.0% YoY. Alongside the February readings, the statistical office (GUS) will also provide an update to the consumer basket structure, but we expect index recalculations to have a limited impact on headline figures in both January and February.

Meanwhile, the National Bank of Poland (NBP) will provide information regarding its forecast revisions. According to the Monetary Policy Committee's statement from its March meeting, the GDP forecast were revised upwards from 3.6% to 4.0% YoY in 2019 (due to a fiscal impulse) and 3.4% to 3.8% YoY in 2020. The analysts' conference should provide greater insight into components such as private consumption and households savings. While we don't dispute the forecast for 2019, we see the 2020 estimate as optimistic.

The CPI estimate for 2019 was lowered from 3.2% to approxiamtely 1.7%. The NBP cut its assumptions as a result of electrical energy prices and lowered its trajectory for core inflation. For 2020, the forecast were lowered from 2.9% to 2.7%. We see both forecast as reasonable.