Growth trends are uneven Elena Ribakova, strategist, Deutshe Bank

Dünya Executive - - REPORT -

The short-term indicators in Turkey (white goods sales and consumer confidence) point to continued cyclical growth following fiscal and credit stimulus, although the effects are beginning to taper off. We continue to expect growth to surprise to the upside and maintain our out-of-consensus call for 2.8% GDP growth in 2017. In Russia, we are keeping growth forecast unchanged at 1.6% in 2017, broadly in line with consensus, with recent demand and production indicators supporting our view. In CEE, growth continued to accelerate driven by a combinatio­n of stronger exports and domestic demand. Pickup in EU-financed projects will also support recovery in investment­s in 2H2017. We do not see central banks moving with hikes in the near term, with the exception of “dynamic optimizati­on” of the average funding rate by the Central Bank of Turkey and possibly one hike by the Czech National Bank. In Turkey, we are still forecastin­g the policy rate at 9.25% for end-2017 and end-2018. But we now expect the CBT to tweak the average rate funding rate (in 11.50-12 range) depending on external conditions and inflation outlook. (May 12)

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