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Turkey Consumer Prices (Apr.)

Turkey’s headline inflation rate recorded another sharp increase to 70.0% y/y in April and there’s a strong chance that it moves beyond its peak in the early 2000s in the coming months. Despite this inflation backdrop, a widening current account deficit and more aggressive tightening by the Fed, there is no sign that Turkey’s central bank is about to hike interest rates. EM Drop-In (5th May, 10:00 EDT/15:00 BST): Join Shilan Shah for our latest monthly session on the big macro and markets stories in EMs. This month, Shilan and the team will be talking Russian gas, FX weakness and surging food prices. Register now
Jason Tuvey Senior Emerging Markets Economist
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Emerging Europe Data Response

Russia Activity Data (May)

The latest Russian data for May suggest that activity, having declined sharply after Western sanctions were imposed in March, has started to stabilise. Some sectors of manufacturing have benefited from a shift towards domestic production. On balance, the fall in Russian GDP this quarter looks like it will be in the order of 10% q/q, not the 15% q/q we had previously expected. EM Drop-In (Thurs, 7th July): Join our economists for their regular monthly briefing on the hot stories in EMs – and those that aren’t getting the attention they deserve. In this 20-minute session, topics will include the outlook for EM FX markets after the recent sell-offs. Register now.

29 June 2022

Emerging Europe Chart Book

Tightening cycles still have some way to go

Inflation has continued to beat expectations across Emerging Europe over the past month, reaching rates not seen in decades in most countries. It is now weighing more heavily on consumer confidence, and the surprise inflation releases for May prompted central banks to accelerate tightening cycles in a number of economies, including Czechia (125bp hike) and Hungary (185bp). Such large hikes are unlikely to be repeated but, with inflation not set to peak for at least a few more months, tightening cycles still have some way to go. The exceptions are Russia and Turkey. Falling inflation will give Russia’s central bank scope to cut its policy rate further and President Erdogan’s grip on Turkey’s central bank means that rate hikes to combat inflation of more than 70% y/y remain off the cards.

29 June 2022

Emerging Europe Data Response

Economic Sentiment Indicators (Jun.)

The EC’s Economic Sentiment Indicators for Central and Eastern Europe showed broad-based declines in sentiment across the region and across sectors in June to levels not seen in a year. Economic activity has generally held up well since the war in Ukraine started a few months ago, but the second half of this year is likely to be more challenging and we think economic recoveries will slow sharply.

29 June 2022

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Africa Data Response

South Africa Activity Data (Feb.)

South Africa’s hard activity data for February were a stark contrast to the recent upbeat surveys as output dropped back in the mining, manufacturing and retail sectors. Electricity problems, fiscal austerity and now the devastation wreaked by floods in KwaZulu-Natal mean that the recovery will struggle to regain momentum. As a result, the SARB will continue to move slowly with monetary tightening.

14 April 2022

Africa Economics Update

SARB will continue to tighten slowly

South Africa’s headline inflation rate will stay close to the upper bound of the central bank’s 3-6% target range in the coming months before falling sharply in the second half of the year. Some MPC members are in a hawkish mood, but we think that interest rates will be raised more slowly than investors expect.

13 April 2022

Emerging Europe Data Response

Turkey Industrial Production & Retail Sales (Feb.)

Turkey’s activity data for February point to a growing divergence between industry, which is being supported by a weak lira, and retail sales which continues to struggle in face of the surge in inflation. On balance, we think that the economy suffered a contraction in Q1 and, with higher global commodity prices adding further fuel to inflation, we expect below-consensus GDP growth of just 0.3% this year.

12 April 2022
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