Key events in EMEA next week

GDP (4Q23): 1.0% YoY

We expect the flash estimate of 2023 fourth quarter GDP growth of 1.0% year-on-year to be confirmed in Poland next week. The StatOffice will also unveil the composition of economic growth in the final quarter. We estimate that households consumption stalled in the fourth quarter after rising by 0.8% YoY in the third quarter. At the same time, fixed investment likely continued rising at a solid pace (7-8% YoY). We estimate that foreign trade contributed positively to fourth quarter GDP growth last year, while change in inventories was still a serious drag on growth. We still remain positive on the 2024 outlook and we forecast consumption-led growth of 3%.

The main event next week in Hungary is the February rate-setting meeting. Favourable domestic developments (e.g., continued strong disinflation) strengthen the case for a larger rate cut, while FX stability and external risks justify a more cautious approach by the National Bank of Hungary. If market stability prevails, we expect the central bank to embrace the present and deliver a 100bp cut, temporarily accelerating the pace of monetary easing.

Elsewhere on the calendar, we will see the details behind the surprisingly ugly December trade balance data, which may give us a clue as to its nature (a temporary hiccup or the start of a bad trend). Last but not least, the manufacturing PMI will reflect the ongoing weakness of the Hungarian industry, which is affected by limited domestic and foreign demand, in our view.

Despite the earthquakes in February, Turkish GDP recorded a strong 4.7% YoY in the first three quarters, mainly driven by domestic demand. However, there were signs of a slowdown in the growth trend in the last quarter. Accordingly, we expect it to come in at 4.1% YoY, with full year growth in 2023 at 4.5% YoY. There are signs of a boost to growth in the first quarter of this year with the rise in minimum wages and acceleration in budgetary spending.