Key events in EMEA and Latam next week

In Poland, the major event next week is the central bank meeting. Recent industrial production data showed much greater depression of the Polish economy than was widely anticipated, but support our below-consensus GDP forecast of -4.5%YoY for 2020.

But we don't expect this to change the MPC stance. In our opinion, the central bank would probably like to wait-and-see see whether the fiscal stimulus is working or not.

The highlight of the week in Hungary is the central bank meeting too. But this is likely to be pretty uneventful, as the central bank is unlikely to change rates.

The Bank might express concerns about the economic impact of Covid-19, doing some groundwork ahead of the June inflation report which will likely see a major downward revision to its economic outlook which seems far too optimistic now. Wage growth might surprise on the upside due to the composition effect as the majority of lay-offs too place in the underpaid services sectors (e.g. restaurants, accommodation, personal services).

Detailed GDP might reveal which sectors were able to save the first quarter due to a flying start in January-February. Our bet is on industry and construction.

After the 5.6% year on year spike in retail trade in March, Russia is likely to see a major slump in April, which the analyst community sees at 15% YoY. We are slightly more optimistic than consensus expecting ‘just’ a 10% drop, assuming the negative effect of the likely drop in the overall household income has been partially offset by higher household borrowing in the previous month, as well as local substitution of international travel by middle to high-income households.

Nevertheless, the scope of the income drop and subsequent recovery remains one of the key factors of uncertainty going forward both for the activity indicators and the budget policy. In the case of further disappointment at the household level, we're not ruling out the fiscal stimulus, currently announced at 3.5% of GPD, could potentially be expanded further by up to 1% of GDP.