Russian Food Ban Annoys Central Europe

Russia’s ban on food imports from the European Union and several other Western countries is a small yet bothersome complication for Central Europe’s food producers.

Poland, the Czech Republic and Hungary all export food to Russia, mainly dairy, fruits, and livestock.

Even though the total share of exports going to Russia is small in the three countries – at 6.3%, 3% and 3%, respectively – the ban may reduce their output.

Russia’s latest move is particularly painful for Hungary.

Prime Minister Viktor Orban and his government, which in April secured its second consecutive term with a majority in parliament, set a goal of widening trade ties with eastern countries such as Russia. Read More »

Hungarian oil and gas group MOL Nyrt. took the opportunity to widen its retail network in Central Europe when it bought this week filling stations from Russia’s Lukoil Holdings amid a battle with regional peers.

Russia’s Lukoil Holdings was the second major oil firm this year to leave the region after Italy’s ENI. Lukoil agreed to sell 44 Czech gas stations which boosted MOL’s network to 318, giving it a market share of nearly 10%, Budapest-based Equilor said.

In Central Europe, MOL competes with Poland’s PKN Orlen and Austria’s OMV.

In the Czech Republic, the largest player is PKN Orlen with its 338 Benzina stations while its subsidiary Unipetrol recently bought ENI’s 32.5% interest in refinery Ceska Rafinerska. It also has a dominant position in its home country Poland and has filling stations in Germany and a struggling refinery in Lithuania.

The current investment boosts utilization at MOL’s refineries because the new Czech fuel stations would be supplied by MOL going forward, Akos Kuti, head of research at Equilor told The Wall Street Journal. Read More »

Central Europe this weekend commemorated the 70th anniversary of a World War II attempt to exterminate all European Roma, a German Nazi initiative that cost the lives of 500,000 Roma and Sinti.

Unlike the extermination of Jews, the systematic killing of the Romani people is much less known and isn’t part of the curriculum in many Central European countries.

Gyula Horvath, one of the Roma participants of the Budapest remembrance walk, was wearing a brown triangle, a sign the Roma had had to wear just like Jews were forced to display yellow stars.

“My great-grandfather told us the story of some family members who were taken away and never returned,” Mr. Horvath said.

“My father’s father was taken away for forced labor almost at the end of the war; they could already hear the Soviet tanks shooting,” said Agnes Daroczi, writer, ethnologist and Roma musician. Soviet troops freed Hungary from Nazi rule at the end of the war.

One of the least known atrocities of World War II took place on Aug. 2, 1944, at the German Nazi death camp Auschwitz-Birkenau when nearly 3,000 Roma people were killed overnight. Read More »

Central Europe’s factory output was mixed in July, going strong in the Czech Republic and Hungary, but hitting a bump in Poland reflecting varied domestic demand across the region and different connections with key euro-zone export markets, data showed Friday.

Purchasing managers’ index, or PMI, figures showed that manufacturing grew last month in the Czech Republic and Hungary, while it contracted in Poland. Read More »

Poland’s consumer price inflation accelerated slightly in June driven by a rise in the prices of alcohol, tobacco and telecommunication services, but remained sharply below the nation’s target.

Inflation in Poland has remained below the central bank’s 2.5% target since December 2012, but the rate setters have kept borrowing costs unchanged since their last cut in July 2013, arguing lower CPI is mostly a result of lower global food and fuel prices while the Polish economy is on the rise and a further reduction in borrowing costs is not necessary.

However, the panel’s view began to crumble lately with monthly data suggesting a soft patch in the recovery while inflation continues to set new lows. Read More »

When it comes to financial skills, Estonian, Czech, Polish and Latvian teenagers are pretty good, an international study released by the Organization for Economic Development and Co-operation showed this week.

“Finance is a part of everyday life for many 15-year olds,” the OECD said in its financial literacy study, which it carried out for the first time under its Program of International Student Assessment.

High school seniors use financial services every day, but “one of their first major decisions may be to choose whether to continue with formal education and how to finance it,” the OECD said. Read More »

WARSAW—Poland is unlikely to get a sovereign rating upgrade any time soon, according to agencies, which have so far ignored remarks by Polish officials who feel their country deserves more recognition for being what they consider a stellar performer during the crisis years.

Fitch Ratings currently rates Poland ’A-’, four notches behind the cherished AAA rating, just like Standard and Poor’s, while Moody’s Investors Service rates the country one level higher at ’A2’.

The credit ratings fare well against its emerging peers, but that doesn’t appease officials.

Top officials of the European Union’s largest emerging economy have urged the agencies to up their countries’ view. Poland was the only EU member to avoid an economic contraction amid the 2009 financial crisis and has on average grown faster than most of the bloc’s states.

It also cut its public debt this year to some 50% of gross domestic product, lower than the EU average. In a controversial move to achieve this, it redeemed sovereign bonds managed by private fund companies this year, rolling back a pension system change of the 1990s and lowering its future borrowing needs in the process.

Central bank chief, Marek Belka, told The Wall Street Journal in late 2011 that a rating upgrade was “clearly within reach.” Finance Minister Mateusz Szczurek this year said an upgrade was possible once Poland is off the EU’s radar for running excessive deficits. Read More »

Factory output continued to expand in three largest Central European economies in June but at a tad slower pace, still driven by steady demand for locally manufactured goods in the region’s key export markets in Western Europe.
Purchasing managers’ index, or PMI, figures released Tuesday showed that manufacturing grew last month in the Czech Republic, Hungary and Poland. The expansion of PMI–tallying new orders, inventory and staffing levels—eased from levels reached in May in all three countries.
The latest readings still bode well for economic growth this and next year in the three eastern European Union states.
While Czech and Hungarian economies have recently rebounded after contracting or stagnating at least in some quarters last year, the Polish economy has regained steam after slowing in early 2013. Read More »

The Czech Republic has beaten Poland to attract Nexen Tire Corp. to invest 829 million euros ($1.1 billion) in its first plant in the European Union as the South Korean company expands outside Asia.

“To win this new major investment, the Czech side has had to fight until the last moment against a competing Polish offer,” Czech Industry Ministry Jan Mladek told The Wall Street Journal late Monday. “Therefore we have chosen a mix of several incentives such as subsidies for creating new jobs, subsidies for strategic investments, tax breaks and a partial compensation for the local (Czech) administration to buy [an] additional building plot [to be used by Nexen].”

The beauty contest of investment aid to attract Nexen reflects greater competition among ex-communist countries in the EU’s east, who are competing to lure large, labor-intensive manufacturing investors and create jobs.

Before picking its Czech site near the city of Zatec, 90 kilometers west of Prague, the South Korean company also considered building its plant in the Polish town of Ujazd, 300 kilometers south-east of Warsaw near the Czech border. Read More »

Tapes leaked over the weekend of a conversation in which Poland’s central bank chief negotiates with a government minister have undermined the governor’s credibility and complicated his relationship with the Monetary Policy Council, economists said.

In the July 2013 recording released by weekly Wprost, Marek Belka can be heard demanding the dismissal of then-finance minister Jacek Rostowski. The government obliged a few months later.

Mr. Belka also talked about the possibility of providing help to the government in an adverse scenario of a whopping deficit and a major economic slowdown, which hasn’t materialized. The Polish constitution prohibits financing of budget deficits with debt from the central bank. Read More »