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Turkey: recovery built on rocky foundations

Q3 GDP figures due next week are likely to show that Turkey’s economic recovery has continued and we think that year-on-year growth could reach as high as 5-6% in Q4 and early 2020. But policy loosening and rapid credit growth risk fuelling a fresh build-up of macro imbalances.
Jason Tuvey Senior Emerging Markets Economist
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Emerging Europe Data Response

Israel GDP (Q2 2022)

The stronger-than-expected 6.8% q/q annualised expansion in Israel GDP in Q2 confirms that the Q1 contraction was just a blip. Economic activity remains strong and alongside the red-hot inflation figures for July, the risks are skewed to a 75bp rate hike at next week’s central bank meeting. We think a 50bp hike (to 1.75%) is just about more likely but we maintain our view that rates will reach 3.0% next year. Europe Drop-In (18th Aug.): Winter is coming to the European economy – but how harsh will it get? Join this special briefing on the economic impact of Russia’s gas supply threat. Register now.

16 August 2022

Emerging Europe Data Response

Russia GDP (Q2 2022)

Russian GDP contracted by 4% y/y in Q2, consistent with a fall of 6% in seasonally-adjusted q/q terms – a much better performance than analysts had expected and than had seemed likely a few months ago. There have been signs of stabilisation in many sectors over the past month or two but we don’t expect the downturn to bottom out until Q2 2023 and think the economy will stagnate at best thereafter.

12 August 2022

Emerging Europe Economics Weekly

Hungary’s fiscal tightening, currencies rebound

Hungary's government has reined in the budget deficit much more quickly than had looked likely since April's election, helping to alleviate the large twin deficits. But this presents a major headwind to the economy and supports our view that GDP growth will grind to a halt in the coming quarters. Elsewhere, CEE currencies have received some much-needed respite this month as global risk sentiment has improved. We think this will be short lived but it will at least take some pressure off central banks that are dealing with red hot inflation.

12 August 2022

More from Jason Tuvey

Middle East Economics Update

Iran: nuclear deal, elections and the economy

Negotiators appear to be closing in on an agreement to revive Iran’s nuclear deal which, if revitalised, would provide a substantial lift to Iran’s economy – it could plausibly expand by 8-10% per year in 2021-23. Higher Iranian oil output would act as a drag on global oil prices and could prompt governments in the Gulf countries to keep fiscal policy tight, weighing on their recoveries.

7 June 2021

Emerging Europe Economics Weekly

Erdogan piles on the pressure, Israel’s surprise coalition

Talk this week of rate cuts in Turkey has led to further falls in the lira and, ironically, means that the central bank will stand pat at this month's MPC meeting. In Israel, the coalition proposal formed to topple incumbent PM Benjamin Netanyahu is so fractured we don't think it will lead to major changes in economic policy. Finally, the announcement by Russia's government to de-dollarise its National Wealth Fund assets won't have an economic impact, but it is a clear move ahead of the Biden-Putin summit this month that Russia sees its future as isolated from the West.

4 June 2021

Emerging Europe Data Response

Turkey Consumer Prices (May)

The latest falls in the lira mean that, despite the fall in Turkey’s headline inflation rate to 16.6% y/y last month, the central bank (CBRT)will probably leave interest rates unchanged at this month’s MPC meeting. But the CBRT is likely to fulfil the president’s desire for monetary loosening by August.

3 June 2021
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