By Tim Gosling of bne in Prague
Slovak gas pipeline operator Eustream has pledged that it will have a route feeding EU gas to Ukraine running at full capacity ahead of the winter heating season, meaning that “Ukraine stands a chance of lasting through the winter”.
Once work has finished on reversing the flow through the Vojany pipeline, it is booked to ship upto 10bn cubic meters of gas per year (cm/y) from Slovakia to Ukraine until 2019. The route is part of an EU-backed plan to alleviate Russian pressure on cash-strapped Kiev by supplying cheaper gas from other EU states.
Moscow cut supplies to Ukraine over its unpaid bills in June. That leaves the EU exposed, with Ukrainian pipes carrying around 40 per cent of Russian gas to the region. If Kiev finds itself short of gas used for heating in the winter, it may be tempted to siphon some off the Russian supply to the EU, as it did in the previous “gas wars” in 2006 and 2009.
Kiska (left) and Fico: victory of the underdog?
By Tom Nicholson of bne in Bratislava
It’s been over a decade since Slovak Prime Minister Robert Fico has been an underdog in any election. But his assertive campaign to capture the country’s highest office – the presidency – in the March 29 crucial run-off ballot suddenly looks vulnerable to the challenge of a rank political outsider.
Poland has the EU’s best growth record in the last five years, but there is a growing awareness that keeping growth high is going to be increasingly difficult in the future – which is why two recent reports on corruption and educational achievements make such good news.
Maybe it’s time to start preparing for a return wave of CEE migrants from western Europe, as Thursday’s flash GDP third quarter numbers show that most of the region’s economies are experiencing a sharp recovery – in contrast to stagnation in the eurozone.
If the normally bearish Capital Economics is starting to sing the economic praises of central Europe it might be time to admit that the downturn is well and truly done and that an economic rebound is underway.
Capital Economics was bearish about the future of the euro, and gloomy about the prospects of CEE countries closely tied to the eurozone. Now that the period of greatest danger for the common currency seems to have passed, the London-based analysis outfit is turning strikingly optimistic on central Europe.
Ivica Todoric, the bullish owner of Agrokor, Croatia’s largest company, has, after many years of wooing, secured a majority stake in Mercator, Slovenia’s biggest retailer and largest employer.
Agrokor has announced that it has agreed with Mercator shareholders to take a 53.1 per cent stake in the company for €240m. The deal values Mercator at €120 per share, substantially below the €221 Agrokor reportedly offered last year.
Central Europe’s recent floods looked dreadful on television. And they will have scarred the memories of the people who were hit the hardest. But the economic effects will be limited thanks to the solid defences put in place since the last flood a decade ago.
So says Erste Bank, which argues that while the floods were similar in scale to those of 2002, the costs for Austria, the Czech Republic, Slovakia and Hungary, will be a small fraction of 2002′s €6bn.
A note from Capital Economics on Friday suggests the economies of central and eastern Europe may finally be emerging into the light.
Or at least its title does (Emerging Europe: Slump in regional growth may be bottoming out). Its message, though, is that while recent GDP figures may have given grounds for that kind of hope, growth is extremely weak and any recovery is likely to be sluggish and uneven.
Bad GDP figures from the eurozone on Wednesday but there’s a pleasant surprise from an unexpected quarter: Hungary’s economy contracted by only 0.9 percent in annual terms in the first three months.
Doesn’t sound like good news. But investors had been expecting a drop of as much as 1.4 per cent. With hopes of further improvement in the rest of 2013 buoying the Budapest market, the forint gained 1 per cent against the euro.
The global battle between Austerians and Spendanigans has opened a front in central Europe and the Spendanigans appear to be gaining ground.
In an interview with the FT, Robert Fico, the centre-left prime minister of Slovakia, came down firmly on the side of encouraging growth and concentrating less on belt-tightening.
Poland’s long scramble to catch up to western Europe has hit a new milestone – for the first time a Polish region has a higher per capita GDP than the EU average.
Mazowsze, the central Polish region which, crucially, contains Warsaw, the country’s largest and wealthiest city, hit 102 per cent of EU per capita GDP in 2010, reports Eurostat, the EU data service.
The numbers are in and they’re not pretty.
Growth in central Europe is only at a sluggish 0.8 per cent – lower than any time since the depths of the economic crisis in 2009.
Germany’s Eon and France’s GDF Suez have struck a deal to sell their joint venture in a Slovak natural gas company to the Czech Republic’s Energeticky a Prumyslovy Holding (EPH) for about €2.6bn ($3.5bn), the companies announced on Tuesday.
The transaction, which has been approved by the Slovak government, will see EPH take a 49 per cent stake and operational control of Slovensky Plynarensky Priemysel (SPP), the local gas utility. The remaining 51 per cent share in SPP is held by the Slovak government.
The eurozone recession is biting hard in central Europe. According to flash data published on Thursday, third-quarter GDP fell in Hungary, Romania and the Czech Republic compared with the previous three months, and rose marginally in Bulgaria.
The only country of the five reporting figures to do reasonably well is – ironically – eurozone member Slovakia, which posted quarter-on-quarter growth of 2.2 per cent. With Poland, which publishes its numbers on a different cycle, also slowing, the next few months look difficult for the region.
Western Europe tends not to look to eastern Europe for lessons in economic management, but in these straitened times it makes sense to consider the big differences in the impact of the global crisis on four countries that are often lumped together – Poland, the Czech Republic, Slovakia and Hungary.