Further signs of regional slowdown

The past month brought further signs of a slowdown in regional growth in Q3. Turkey is the main culprit. Growth there appears to have slowed to a crawl following July’s coup attempt, which hit consumer spending and investment, and exacerbated the downturn in tourism. This slowdown will probably be temporary but, even when it fades, the country’s large economic vulnerabilities mean growth will be weaker than most anticipate. Elsewhere, the Central European economies softened in Q3, although growth in most places remained reasonably strong at 2-3%. Russia is the one major economy where things don’t seem to have got worse between Q2 and Q3, but it still looks like the economy contracted, probably by around 0.5% y/y. Overall, we think GDP in the region as a whole expanded by around 1.0% y/y or so in Q3, down from 1.5% in Q2.