According to the findings of the Intesa Sanpaolo Study Centre, the indicators point to a strengthening of economic activity in the countries of Central and Eastern Europe (CEE) with branches of the Intesa Sanpaolo group in August and, at the same time, a consolidation in South-Eastern Europe (SEE) markets after the strong rebound during the second quarter. Industrial production grew both in the CEE region, with a trend between 3,5% recorded in Hungary and 17,5% in Slovakia, and between EEA countries, from 2,4% in Bosnia to 5,3% in Romania. In the third quarter in Russia the PMI indicator, which reflects the ability to acquire goods and services, rose above the threshold of 50, a sign of a recovery in the sector's activities, even if the construction sector remained weak; at the same time in Ukraine, manufacturing production and building activity increased the sustained pace already recorded in the second quarter. In the MENA region, Egyptian industrial production decreased by an average of 10,8% over the months due to lower tourism revenues and the slowdown in trade flows through the Suez Canal.
The inflation rate increased slightly in August in all CEE/SEE countries, thanks to the effects of the albeit partial reversal in energy prices, however still remaining negative in Slovakia, Bosnia, Croatia and Romania. In Russia, inflation fell further, reaching 6,4% in September. Egypt also decreased to 14,1%, mainly due to the base effect. However, in the coming months, analysts expect a major reform in terms of indirect taxation and a cut in subsidies for energy, among the conditions required by the IMF for the Extended Fund Facility of 12 billion to the country.
In this scenario, long-term yields declined further in the CEE/EEA region, where exchange rates remained broadly stable. Speculations about a move to a more flexible exchange rate regime in Egypt intensified, resulting in a sharp depreciation of the Egyptian pound.
In August, banking aggregates showed a generally positive trend, although still modest in Bosnia, while more pronounced in Serbia and Slovakia. Negative repercussions occurred in Slovenia, Croatia and Hungary, mainly due to the bank restructuring process. In Russia, loans are increasing, albeit only by 2%. In Croatia and Slovenia, on the other hand, the persistent decline in foreign liabilities was partially offset by the increase in deposits. In most CEE/EEA countries, the growth of deposits continued to be strong: this factor, accompanied by the decline in business loans, is interpreted by analysts as a sign of a still weak demand for investments.
