Israel GDP (Q2 2021)

The larger-than-expected 15.4% annualised expansion in Israeli GDP in Q2 took the economy to more than 3% above its pre-pandemic level. While we expect growth to slow markedly in Q3 as the re-opening boost fades, Israel’s central bank will be comforted by the strength of the recovery and we think it will continue to signal the phasing out of some of its emergency support measures over the rest of the year.
Liam Peach Emerging Markets Economist
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Emerging Europe Economics Weekly

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This week has been dominated by the collapse in the Turkish lira and all our research on the crisis can be found here. While Turkey’s problems have been driven by a ‘head-in-the-sand’ approach to inflation and falls in the lira, Hungary’s central bank tightened policy further this week amid signs that officials across Central Europe are taking the inflation fight more seriously and becoming less tolerant of currency weakness. Elsewhere, the early signs are that a new grand coalition in Romania does not have the appetite for much-needed austerity. Finally, the latest tranche of IMF funds provide a welcome boost for Ukraine’s economy.
Drop-In: Why is Asia sitting out the global inflation surge? 09:00 GMT/17:00 HKT, Thursday 2nd December

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The larger-than-expected 10.3% y/y expansion in Russian GDP in Q2 suggests that the economy returned to its pre-pandemic level as growth was driven by broad-based strength across sectors. Growth is likely to slow in Q3, but the key story is that the recovery will maintain a solid pace over the rest of the year.

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Emerging Europe Data Response

Poland GDP (Q2 2021)

The 1.9% q/q expansion in Poland’s GDP in Q2 left the economy 0.5% above its pre-pandemic size and we expect another strong reading for Q3 as activity in consumer-facing sectors continues to recover. Taken together with the further rise in headline inflation above the central bank’s target in July, the possibility of an interest rate hike in November is growing.

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