Key Events in EMEA next week

Russian activity data should be positive, with retail trade likely showing 25-30% year-on-year growth, mostly on low base effects, but also thanks to restrained foreign tourism. Banking sector statistics have already indicated that Russians have financed local consumption with higher unsecured borrowing and savings. For the longer term we remain cautious, however. Challenges include the reopening of foreign tourism to Turkey and mounting risks of a lockdown due to a third wave of Covid in Russia. Despite government efforts, the vaccination rate is below 15%. A strict lockdown would cost around 1% of annual GDP per month.

In Hungary, the labour market will be in focus. With a reopening on the way in May, we expect the unemployment rate to decline. Due to last year’s negative shock in wages in April, the base effect will support the year-on-year growth rate in April 2021. This could translate into double-digit wage growth again. A manufacturing PMI reading for June will also be released. We expect this to follow European sentiment and show further improvement, cementing our view of solid 2Q GDP growth.