ZEW-Erste Group Bank Economic Sentiment Indicator for Central and Eastern Europe (CEE)- Economic Sentiment for the CEE Region Largely Unchanged

In July 2013 economic expectations for Central and Eastern Europe including Turkey (CEE) remain almost unchanged. The ZEW-Erste Group Bank Economic Sentiment Indicator for the CEE region increases slightly by 1.7 points to a level of 25.7 points.

Among the individual CEE countries, the largest improvements of economic sentiment are displayed by the indicators for Turkey and the Czech Republic. The rising optimism for the Czech Republic is rather surprising in light of the weak industrial production figures published recently.  The improvement of economic expectations for Turkey constitutes a partly revision of last month’s sharp decrease (down 63.4 points in June 2013). The ZEW-Erste Group Bank Economic Sentiment Indicator for Central and Eastern Europe reflects the financial market experts’ expectations for the CEE region on a six-month time horizon. The indicator has been compiled on a monthly basis together with further financial market data by the Centre for European Economic Research (ZEW) in Mannheim with the support of Erste Group Bank in Vienna since 2007.

This month’s special question asks the financial market experts to assess the impact of the political turmoil in Turkey on the recently revived negotiations for the country’s EU-accession. According to the majority of 51.7 per cent of the survey participants the turmoil will lead to a delay of Turkey’s EU accession. Another 22.4 per cent of the experts even see the accession put at risk. The majority of 49.3 per cent do not see any cross-border effect of the turmoil. The majority of those, who do see cross-border effects, mention Romania and Bulgaria as the countries, which are most likely to be affected by the political uncertainties in Turkey.

Experts’ assessment of the current economic situation for the CEE region has also remained largely unchanged in July. The respective indicator has decreased slightly by 1.8 points to a level of minus 14.2 points. Among the respective indicators of all individual countries, the by far largest decrease is displayed by the indicator for Poland. In the current survey the respective indicators for Poland, Slovakia and Turkey display their lowest levels at least for the last three years.

For further information please contact

Zwetelina Iliewa, Phone +49  621/1235-346, E-mail iliewa@zew.de

Survey Procedure and Methodology

The Financial Market Survey CEE is a survey carried out among financial market experts by the Centre for European Economic Research in Mannheim (ZEW) and Erste Group Bank AG, Vienna. The target of this survey is to develop indicators describing the economic conditions in Central and Eastern Europe (CEE) as well as in Austria. The CEE region observed in the survey consists of Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia , Slovenia and, since October 2010, Turkey.

The financial experts are questioned on their evaluations of the current business situation, the medium-term prospects of the respective economies and their expectations as to the development of the inflation rate, the short- and long-term interest rates, exchange rates and stock prices on a six-month time horizon. The analysts’ assessments reflect the qualitative direction of the estimated changes. The quarterly Financial Market Report CEE contains the results for every Central and Eastern European country in detail.