Russian GDP growth was confirmed at 2.7%

Turkish Q3 GDP numbers disappointed strongly on the downside as GDP growth was “only” 5.5% y/y – well below both our and the consensus expectation. Furthermore, the structure of growth is fairly worrying as the main reason for the disappointment came from weaker exports. The apparent “softening” of Turkish growth makes it even more likely that the TCMB will keep rates on hold for longer.

Russian GDP growth was confirmed at 2.7% for Q3 10. That brings overall growth for the first three quarters to 3.7% y/y. We have been quite pessimistic on Russian growth for 2010 and even a weak Q4 would not diminish our optimism for 2011. We expect continuing bank lending recovery, increasing investments and the rising oil price to spur GDP growth to 4.7% in 2011.

Hungarian inflation in November remained unchanged at 4.2% y/y compared with October; however, the outcome was slightly above consensus as inflation was expected to moderate to 4.1% y/y.

Polish current account and trade balance numbers for October will be released today. We expect moderate downside surprise in both outcomes vs consensus.

Trading update
The EMEA markets were fairly mixed during Friday’s session. The Czech koruna again underperformed other EMEA currencies and even more hawkish comments from Czech central banker, Robert Holman, who said that he expects a first rate hike earlier, perhaps in mid-2011, did not boost CZK. In fact, our new CZK forecast, which will be published this Wednesday, points to further weakening of the CZK on a three-six month horizon.