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Turkey Industrial Production & Retail Sales (Mar.)

Turkey’s activity data for March suggest that the economy held up better than expected in Q1 as a weak lira appears to have supported industry, while policies to preserve households’ purchasing power have limited the downturn in retail sales. But spillovers from the war in Ukraine mean that, for now, we are sticking with our below-consensus forecast for GDP growth of 0.3% this year. EM Drop-In (17th May): Do current EM debt strains point to a repeat of the kinds of crises seen in the 1980s and 1990s? Join our special briefing on EM sovereign debt risk on Tuesday. 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

More from Jason Tuvey

Africa Economics Weekly

SA recovery falters, wage talks, Kenya’s soft start to 2022

Recent flooding in a key province and warnings this week that power cuts could reach unprecedented levels are the latest in a long list of blows to South Africa’s economy that have repeatedly stifled any emerging growth momentum. Meanwhile, South African trade unions’ opening offer in public sector wage negotiations will almost certainly be rebuffed, but we expect that the government will ultimately concede some ground. Elsewhere, Kenya’s statistics office confirmed this week that its economy expanded by 7.5% last year but more timely indicators point to weakness so far this year.
China Drop-In (12th May, 09:00 BST/16:00 SGT): Join our China and Markets economists for a 20-minute discussion about near to long-term economic challenges, from zero-COVID disruptions to US-China decoupling. Register now.

6 May 2022

Emerging Europe Data Response

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

5 May 2022

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
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