Economic sentiment in the industrial sector of large eastern European economies has continued to worsen, by and large. In September, the manufacturing PMI deteriorated further or stayed stable at a weak level in Poland (47.8 points, down from 48.8 in August; a reading below 50 signals contraction), Czechia (44.9, unchanged), Hungary (51.8 from 52.6) and Russia (46.3 from 49.1). This took the quarterly averages in Q3 2019 to the weakest levels since Q4 2012 in Poland and Hungary and even since Q2 2009 in Czechia and Russia. A common feature in these economies was that new export orders fell strongly, reflecting rising fears surrounding ongoing trade conflicts. In Russia, the steep fall in the overall index also reveals declines in new domestic orders and production, signaling that the economy may drop into recession in Q3. Meanwhile, Turkey’s overall PMI improved to a neutral 50.0 (from 48.0) supporting the view that the recession there has bottomed out. Yet, risks remain on the agenda in Turkey.
