Shares in South East Europe gained ground this week, overcoming concerns about the macroeconomic outlook amid strong inflation and the ongoing war between Russia and Ukraine. However, the war will have a severe effect on economies far beyond the immediate area of the conflict, according to new research from the European Bank for Reconstruction and Development (EBRD). For the entire Western Balkans, the EBRD projected 3.2% growth in 2022, which is 0.9 percentage points lower than its previous forecast.
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Greek equities jumped this week with the Athens Exchange (ATHEX) general index advancing 5.64% despite underwhelming data reports. Inflation in the country jumped to 8% in March, year-on-year, according to preliminary data while the unemployment rate stood at 11.9% in February.
Greece’s economy is seen expanding 3.5% this year due to higher energy prices and the Ukraine crisis, the International Monetary Fund said on Friday, lowering a previous 5.4% estimate made last summer. Greece’s public debt, at about 200% of GDP last year, is expected to decline, the Washington-based lender said.
Stocks in Serbia were also higher ahead of April 3 general and presidential elections. The BELEX15 index added 0.02%. The EBRD projected 3.3% economic growth in Serbia in 2022, which is lower than its previous forecast, as of all countries in the Western Balkans, Serbia has the highest exposure to Russia’s economy.
“All gas imports are sourced from Russia and subject to a bilateral government contract with preferential prices to a large degree, but conditions are expected to change at end-May, making Serbia significantly more exposed to future changes in market prices,” the London-based lender noted.
Romanian markets posted gains with the BET index jumping 2.96%. The EBRD cut Romania’s 2022 economic growth forecast to 2.8% while in its November forecast the lender pointed to 4.4% GDP growth. Romania’s CFA analysts expect GDP growth of 3.5% this year and see the Leu At 5.1 units versus the Euro and the annual inflation rate at 7.28% in the next 12 months. Romanian central bank’s foreign exchange reserves dropped to 40.143 billion euro in March, official data showed.
In other news, the Romanian government on Thursday approved a planned initial public offering (IPO) for state-owned hydropower producer Hidroelectrica. Meanwhile, Ukraine seeks an agreement with Romania on exporting its agricultural products through the Romanian port of Constanta.
Slovenian stocks as measured by the SBITOP index returned 1.50%. The EBRD revised down to 3.6% Slovenia’s 2022 GDP growth. Slovenia’s annual inflation rate eased to 5.4% in March, from a near 14-year high of 6.9% in the previous month, On a monthly basis, consumer prices went down 1.1%, following a 1.4% increase in the previous month, Statistical Office data showed.
In Cyprus, the stock market’s returns were positive for the holiday-shortened week. The General Index was up 0.58%. The local bourse was closed on Friday in observance of the Cyprus National Anniversary. Economic growth in the island will slow sharply before recovering, due to the shock associated with the war in Ukraine, according to the International Monetary Fund.
“Despite a reduction in exposures to Russia, Cyprus is highly vulnerable to the economic fallout from the war in Ukraine,” the institution said. Growth is projected to slow from 5.5% in 2021 to around 2% in 2022, it added.
Montenegro’s MNSE 10 index fell closed up 0.71% on Friday. The EBRD cut Montenegro’s 2022 economic growth forecast to 3.7% amid the Ukraine war. However, the Western Balkan country sees stable supply chain despite the war, the Chamber of Commerce said. And according to Montenegro’s Prime Minister Bulgaria and Romania will back Montenegro in securing basic foodstuffs.
Bosnian stock markets bucked the trend and generated a negative return for the week. The SASX10 index fell 0.18%. The country’s GDP grew 7.6% y-o-y in the last quarter of 2021, according to a first estimate by the Bosnia and Herzegovina Agency for Statistics (BHAS). The EBRD lowered Bosnia’s 2022 GDP forecast to 2.3%.
For the week Sofia’s SOFIX index surged by 4.03%. Scope Ratings sees Bulgaria’s GDP growth slowing to 1.8% this year, while the EBRD cut Bulgaria’s 2022 GDP growth forecast to 2.8%.
The country’s business climate worsened in March. The general business sentiment indicator decreased by 4.8 percentage points (pp) last month compared to February, as a result of the unfavorable business environment in the industrial, retail trade and services sectors, the National Statistical Institute (NSI) said in a monthly business climate survey.
SKOPJE, N. MACEDONIA
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Croatian equities moved higher for the week. The CROBEX index increased by 1.73%. The EBRD lowered Croatia’s 2022 GDP growth projection to 3.2% In commodity news, Croatia could increase the capacity of its LNG regasification terminal on the island of Krk, the country’s prime minister Andrej Plenkovic said on Monday.
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Kyriaki Balkoudi is a markets editor for World Markets Daily. She has a bachelor’s degree in Balkans Studies from Aristotle University of Thessaloniki, Greece and a master’s degree in International Politics from City University London, UK.