Key events in EMEA and Latam next week

Hungary is showing mixed results when it comes to the economic impact of Covid-19. Retail sales growth remained the strongest in the European Union, while the industry’s collapse was more severe than we expected. We still think construction will surprise on the upside, thus Hungary will be able to avoid a significant quarter-on-quarter GDP contraction, for now.

We expect Hungary to outperform its peers, posting a 3.5 YoY GDP growth in 1Q20.

We expect a relatively mild slowdown in Poland – monthly activity indicators suggest the overall dynamics should remain in the positive territory (1.0%YoY) in 1Q20. Economic growth should be still driven by consumption. Also, public spending should maintain investment growth.

The bottom should occur in 2Q. We expect activity contraction by 8.9%YoY. Also, recovery in the second half of the year is expected to be sluggish. Therefore we see 4.5%YoY recession for 2020.

We expect some deceleration in April inflation, mainly on the back of 10% MoM decline in fuel prices, though a surprise in both directions cannot be ruled out in current extraordinary times. Flash GDP will indicate contraction given Covid-19 measures, though the intensity of a slump is not straightforward. While industrial production fell by 3% QoQ, retail sales (including car sales) fell by 5.8% QoQ, construction increased by 2.9% QoQ. The highest uncertainty is, however, concentrated in services.

As such, we expect GDP to fall around 3% QoQ, pushing GDP YoY dynamics close to -2%.