Oil prices are likely to remain stable between USD 45 and 50 per barrel of Brent until early 2017, which should lead to a globally higher inflation rate in the fourth quarter, according to the analysts of Raiffeisen Research.
”For the full year 2017, oil prices are still expected to rise to an average of USD 55 per barrel of Brent, but only given that in the second half of 2016, the currently well-filled global oil stocks are emptied and that Saudi Arabia is not further turning up its oil tap,” Austrian bank analysts say.
Obviously, the global liquidity flood also has an impact on the CEE region.
”Although growth is not primarily due to the monetary policy, the monetary expansion in countries such as Hungary or Romania does contribute very well to a friendly business climate.”
The low interest rate policy in large parts of CE and SEE gets more leeway due to the ultra-expansive position of the ECB.
However, the historically low interest rates on the money market and partly also on the capital market are only possible because most price developments throughout the region are declining. Nevertheless, the downward spiral of prices, that has lasted since 2014, has no impact on wage developments, which have been growing nominally by an annual average of around 4 per cent (in Hungary even significantly higher). Given the noticeable employment growth and at the same time significantly decreasing unemployment rates, private consumption remains the growth driver in the CE/SEE region.
In CE, the 2016 outlook for GDP growth remains stable at 3.0 per cent, while expectations for SEE were increased by 0.8 percentage points to 4.0 per cent. The forecasts for the GDP growth rates in Croatia (2.3 per cent), Bulgaria (3.0 per cent) and Romania (5.2 per cent) are now significantly better than last quarter. For 2017, Raiffeisen Research currently expects continued stable growth of 3.3 per cent in CE and SEE respectively.