Key events in EMEA and Latam next week

Next week’s calendar for Hungary will be quite heavy, headlined by the first hard data for the fourth quarter. October will still show some growth in the retail sector as the new containment measures only came into effect in November. We expect the good series of industrial data to continue based on soft indicators and the order books, so industrial production could show a positive year-on-year figure. With the revised third quarter GDP data, we will know the details behind the rebound. Our bet is on services and industry.

Russian CPI is likely to pick up from 4.0% year-on-year in October to at least 4.3% YoY in November due to higher global grain prices, recent rouble depreciation, and the lack of Black Friday promotions this year. This will mean a high likelihood of an unchanged key rate at 4.25% this December, but it does not mean a reversal in the Bank of Russia’s overall dovish stance, as confirmed this week by Governor Elvira Nabiullina. Based on the temporary nature of the current CPI uptick and likely weakness in the Russian growth story in 2021 we continue to expect a small reduction of 25-75 basis points in the key rate from the current level, depending on the global emerging market trends.

We will get detailed 3Q GDP data next week in the Czech Republic. While the economy accelerated solidly by more than 6% quarter-on-quarter, according to the flash estimate, it will decline again in the last quarter. Next year’s outlook is mixed; more positive news related to vaccination vs. the assumption that Covid restrictions will continue to weigh on growth in the first half of the year. The November PMI should remain above 50 points but lag behind its counterpart from Germany, and 3Q wage growth should accelerate by around 3.5% YoY in nominal terms (0.5% real terms) after a weak 2Q (0.5% YoY nominal, -2.5% YoY real) affected by coronavirus economic restrictions.

As the 3Q data shows a continued strong recovery, we expect GDP growth in this period to be 4.5% YoY, though the pace of activity will likely lose momentum given moves by the Banking Regulation and Supervision Authority and the Central Bank of Turkey.

November inflation will likely push the annual figure up to 12.6% from 11.9% a month ago given the continuing impact of food prices and pass-through from currency volatility.