Poland Activity Data (Dec.)

Polish activity data for December showed that industry continued to boom and the easing of virus restrictions supported a rebound in retail sales, with the result being that any contraction in GDP over Q4 as a whole was modest. Activity will be hampered in the near-term by ongoing containment measures, but we are confident that Poland will outperform the rest of Central Europe this year and next.
Jason Tuvey Senior Emerging Markets Economist
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Emerging Europe Economics Focus

Turkey’s “new economic model” to amplify old problems

The “new economic model” adopted by Turkey’s government is likely to mean low real interest rates and a persistently weak lira, but it will come alongside a shift towards capital controls, ever higher inflation and growing fiscal and banking sector risks. Drop-In: Jason will be discussing Turkey's mounting economic risks in a 20-minute online session on Thursday at 09:00 ET/14:00 GMT. Register here.

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The implications of the Russia-Ukraine crisis

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Russia-NATO talks crumble, CBRT’s reserves plunge

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Emerging Europe Economics Update

Turkey’s inflation risks mount, CBRT to delay rate cuts

Turkish inflation hit a two-year high in June and recent domestic energy price hikes will cause it to rise even further over the next couple of months. High inflation and signs of a quick recovery from May’s lockdown mean that the central bank will probably delay the start of its easing cycle until later this year. We now expect the one-week repo rate to be lowered to 17.00% by end-2021 (previously 14.00%).

7 July 2021

Emerging Europe Data Response

Turkey Consumer Prices (Jun.)

The fresh rise in Turkey’s headline inflation rate to 17.5% y/y in June, coupled with signs of a strong rebound in activity after May’s three-week lockdown, means that an interest rate cut in the next couple of months is increasingly unlikely. An easing cycle is now more likely to commence later this year when inflation looks set to fall sharply.

5 July 2021

Emerging Europe Economics Weekly

Turkey dollarisation, Ukraine-IMF, Russia & Poland rates

Turkey’s central bank took steps this week to tackle deposit dollarisation in the banking sector, although these efforts will fail to make headway in the absence of a stronger commitment to rein in high inflation. Meanwhile, Ukraine’s government still has work to do to secure the next tranche of its IMF loan, but the economy can muddle through without help from the Fund for some time. Finally, other developments this week suggest that Poland’s central bank may stick to its recent dovish rhetoric while Russia looks like it could accelerate the pace of monetary tightening.

2 July 2021
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