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[LINK] “Euro Debate Ignites in East EU in Face of Public Skepticism”

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Bloomberg’s Lenka Ponikelska writes about the continued appeal to some in non-Eurozone central Europe of membership in the single currency.

In the Czech Republic, the prime minister said on Wednesday that joining the euro soon would help the economy after the president challenged the central bank’s long-standing resistance with a vow to appoint policy makers who favor the common currency. In Poland, the main divide between the top two candidates in the May 10 presidential election is whether the region’s biggest economy should ditch the zloty.

“It’s quite interesting how the sentiment has shifted — I’m slightly surprised by this,” William Jackson, London-based senior economist at Capital Economics Ltd., said by phone on Wednesday. “As the story coming from the euro zone in recent years has been negative, it’s very hard to imagine how the euro case for the public would be made now.”

The obstacles are many. Romania, which has set 2019 as a potential target date, and Hungary don’t meet all the economic criteria. Poland faces legal hurdles and the Czech government has said it won’t set a date during its four-year term. As a standoff between Greece and euro-area leaders threatens to push the country into insolvency and potential exit, opinion polls show most Czechs and Poles oppose a switch.

The appeal of the euro, which all European Union members save Britain and Denmark are technically obliged to join, suffered when the area had to provide emergency loans to ailing members during the economic crisis. While five ex-communist countries that joined the trading bloc in 2004 — Slovakia, Slovenia, Estonia, Latvia, and Lithuania — have acceded, the Czech Republic, Poland and Hungary don’t have road maps.

The region’s three biggest economies argued that floating currencies and control over monetary policy helps shield themselves against shocks like the euro crisis even if smaller countries may benefit from lower exchange-rate volatility and reduced trade costs. Facing weakening in their korunas, zlotys, and forints, some politicians in eastern Europe are questioning that logic.

Written by Randy McDonald

April 2, 2015 at 7:51 pm

[LINK] “Polish GDP Growth Surges on Consumer Spending, Investment”

Writing for Bloomberg, Milda Seputyte and Dorota Bartyzel note the continuing strength of the Polish economy.

Poland’s pace of economic growth last year almost doubled from 2013, buoyed by increased investment and consumer spending as falling prices boosted their buying power.

Gross domestic product rose 3.3 percent from a year earlier, the fastest since 2011, after a revised 1.7 percent increase in 2013, the statistics office in Warsaw said Tuesday. That matched the median estimate of 29 economists in a Bloomberg survey.

Poland, whose economy is the only one in the European Union that’s gained every year through the global financial crisis, benefited from a pickup in domestic-demand growth to 4.6 percent in 2014. Fixed investment surged 9.4 percent from 0.9 percent a year earlier, the statistics office estimated.

“Last year was a really good one for Poland, despite outside geopolitical tensions and weakness in the euro area,” Adam Antoniak, a Warsaw-based economist at UniCredit SpA’s unit Bank Pekao SA, said by e-mail. “We had a noticeable rebound of domestic demand, which was the main engine of economic expansion, and that positive trend should be continued this year, helping to maintain a similar pace of growth.”

[. . .]

The uptick in growth shows the EU’s biggest eastern economy warded off risks emanating from a slowdown in the euro area, its biggest export market. Poland also had to weather the effects of the escalating conflict in neighboring Ukraine, which affected the country through counter-sanctions imposed on Russia.

Written by Randy McDonald

January 28, 2015 at 11:27 pm

Posted in Economics

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[LINK] “Hungarian Franc-Loan Fix Provides Cautionary Tale”

Bloomberg’s Zoltan Simon notes that the surging value of the Swiss franc has left many central European countries, with large numbers of homeowners having mortgages taken out in the newly-strong currency, trying to figure out how to learn from Hungary’s earlier experience.

Governments from Poland to Croatia are under pressure to mimic Hungary’s help for eastern European borrowers with $40 billion in Swiss-franc loans, without repeating the same mistakes.

Romania is considering a proposal to convert franc loans at a discounted rate while Croatia moved to force banks to take exchange-rate losses for the next year. Poland, for now, isn’t considering emulating Hungary’s full-conversion of franc mortgages. Leaders in all three nations face elections in the next two years.

As countries in the European Union’s east weigh steps to help about 800,000 borrowers, Hungarian Prime Minister Viktor Orban’s five-year fight to root out foreign-currency loans is serving as both a model and a cautionary tale for policy makers. Orban’s measures weakened the forint and curtailed lending before he moved to convert all foreign-currency mortgages in November, ahead of the franc’s surge last week.

“The Hungarian lesson should raise some red flags,” Viktor Szabo, who helps oversee $12 billion in emerging-market debt at Aberdeen Asset Management Plc, said by phone from London on Tuesday. “While there may be valuable lessons in there, a bank-sector shock similar to Hungary’s may jeopardize growth in the region.”

Written by Randy McDonald

January 23, 2015 at 9:55 pm

[BLOG] Some Friday links

  • blogTO notes that crowd-funded transit might be coming to Toronto’s Beaches.
  • The Broadside Blog’s Caitlin Kelly describes her favourite shopping experiences in Paris.
  • Centauri Dreams considers the question of how to name planets.
  • Crooked Timber discusses predictions for the coming year which descend into Bitcoin debates.
  • The Dragon’s Gaze links to a paper suggesting that giant stars tend not to have giant close-in planets.
  • The Dragon’s Tales links to a paper noting the complicated entry of maize from Mexico into the United States.
  • Livejournaler jsburbidge notes the serious costs associated with a public housing problem for the homeless of Toronto.
  • Marginal Revolution notes that many Poles hold mortgages denominated in Swiss francs, and have thus been hit by the recent currency fluctuations.
  • Otto Pohl describes his writing project on the 1966 coup in Ghana.
  • The Power and the Money’s Noel Maurer notes the problems with inexpensive manned spaceflight.
  • Torontoist and (again) blogTO and their commenters react to the end of Target Canada.
  • Towleroad notes that anti-gay American Roman Catholic cardinal Raymond Burke is also a misogynist.
  • Window on Eurasia argues that a Belarusian revolution would lead to a Russian invasion of that country, and wonders about European Union policy towards Crimea.

[LINK] “Post-War Ukraine ‘Natural’ as Warsaw Bourse Looks East”

With Poland’s dynamic but stagnant domestic economy, looking east to cultivate Ukraine as an economic partner as described by Bloomberg’s Konrad Krasuski and Maciej Martewicz makes perfect sense.

The Warsaw Stock Exchange, home to a dozen traded Ukrainian companies, is betting on more listings from the former Soviet republic once the conflict there recedes and will offer to help develop Kiev’s nascent capital markets.

Growth on the Warsaw bourse, central Europe’s biggest stock market, stalled last year after the government halted sales of new companies to the public and overhauled its pension fund industry.

After merger talks with Vienna failed last year, Warsaw bourse is turning east to help more Ukraine enterprises find funding in a country with 10 mostly illiquid bourses. The Ukraine conflict with pro-Russian rebels has killed more than 4,800 people, pushed Poland’s eastern neighbor into its deepest recession since 2009 and left investors skittish about the country of 43 million people.

“Ukraine is a natural, strategic direction for us,” Chief Executive Officer Pawel Tamborski said in an interview at the Bloomberg News office in Warsaw yesterday. “We understand that now it’s not the priority for the Ukrainian government, but we are ready to help make the market less fragmented.”

Ukrainian companies have sold 2.9 billion zloty ($797 million) of shares in Poland since 2006, according to data compiled by Bloomberg. They were lured by the country’s pool of pension and mutual funds and the higher stock-market liquidity than on any of their home country’s 10 stock exchanges.

Written by Randy McDonald

January 15, 2015 at 10:55 pm

[BLOG] Some Monday links

  • blogTO looks at the role of the pigeon in Toronto.
  • The Dragon’s Gaze considers the first steps towards estimates of the distribution of planets across the Milky Way Galaxy.
  • The Dragon’s Tales notes the discovery of a herbivorous plant.
  • Joe. My. God. notes an American homophobic preacher who argues that Russia will nuke the US for being gay-friendly, and notes the Polish parliament’s rejection of legislation on civil unions.
  • Language Hat notes, contra Chomsky, that there is no such thing as a language instinct.
  • Lawyers, Guns and Money mocks opposition to lifting the Cuban embargo and notes Rudolph Guiliani’s support for whatever the police do.
  • Marginal Revolution looks at American representation in North Korean films and reports on the Chinese reaction to The Interview.
  • pollotenchegg maps population change across Ukraine over 2014.
  • The Power and the Money’s Noel Maurer notes the effect, or lack thereof, of global economic shocks on Argentina.
  • Peter Rukavina shares the script he used to strip The Guardian (of Charlottetown) website of ads.
  • Torontoist describes the history of the Mail and Empire.
  • Towleroad links to the interview of the widowed partner of Sydney siege victim Tori Johnson.
  • Window on Eurasia notes the departure of migrant labourers from Russia, looks at Russian preferences to keep a pro-Russian Donbas within Ukraine, and looks at the ideological issues surrounding Russia’s opposition to Ukraine and the West.
  • Yorkshire Ranter Alex Harrowell reports on right-wing party politics in England.

[NEWS] Some Monday links

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