Raffeisen Capital Management views the move as a temporary dip in growth within a longer-lasting upswing that it believes will stay intact as long as the US and Europe do not slip into recession.
“Even in this case, most of the emerging markets would be quite well prepared thanks to their noticeable increase in financial resources and the strong growth of their domestic markets,” the firm said in a note to investors.
In particular, Raiffeisen says Russia’s recovery, while continuing, is losing momentum as the central bank recently left interest rates unchanged.
In its agricultural sector, this year’s harvest should be strong, meaning food prices would not exert any “significant inflationary pressure” compared to last year, when there was an extreme drought. This should have a positive effect on inflation, currently still above 8%, Raiffeisen said.
Looking towards Hungary, the manager believed the country’s inflation rate once more had given investors an upside surprise as it fell more than anticipated.
“If inflation continues to decline in the second half of the year – as is predicted by the central bank – there would be room for interest rate cuts,” Raiffeisen said. “The forint was once again subject to strong fluctuations in July; the Hungarian currency appreciated slightly against the euro in month-on-month terms.”
