Key events in EMEA and Latam next week

Russian industrial production should post a mild improvement in September, however, it will be largely a reflection of the favourable calendar effect (extra working day, supporting manufacturing data), rather than improvement in the mood, as shown by the recent deterioration in the PMI reading.

The stabilization and potential rollback in the fiscal support (also likely to be confirmed by the budget fulfilment data to be released next week) and uncertainties regarding consumer demand should limit the pace of the recovery.

This, combined with the recent resurgence of Covid-19 in Russia and increased fears of the second round of quarantine measures, is again putting pressure on our above consensus expectations of a modest 2-3% GDP drop for 2020.

This week we’ll learn details of the CPI surprise this month. The was caused by a rise in the core which we estimate jumped 4.3% vs 4.0% YoY in August. This likely reflects recovering demand, boosted by a generous fiscal package. Also, the rise in the core might be caused by education costs, a pick-up in airfare tickets (this category plummeted a month prior), or less reduced priced goods offered after the first wave of the pandemic.

The current account figure for August will also be published. We expect a further surplus. Unlike some other CEE countries, Poland relies far less on the automotive industry, which has remained relatively weak throughout the pandemic.

Despite the fact that CPI will most likely slightly fall in MoM terms in September, both due to typical seasonality in core prices and fuel prices, YoY dynamics will accelerate due to a low base from the last year, when food prices significantly fell.

This means that CPI might get already above 3.5%, but we expect below 3% CPI print since November. Still, this year’s inflation is heading to the highest average print since 2012 (3.3%), which might be even slightly exceeded.