Regional slowdown, Turkey’s bumpy recovery

The raft of Q1 GDP data due next week are likely to show that aggregate growth in Emerging Europe slowed to its weakest pace in over two years. Much of this reflects weakness in Russia; growth in Central Europe held up better thanks to the strength of domestic demand. Turkey’s economy probably grew in Q1 after two quarters of contraction (its GDP data are due in June). But the sell-off in Turkish markets and associated tightening of financial conditions has raised the risk of a renewed fall in GDP in Q2.
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Emerging Europe Data Response

Turkey GDP (Q3 2021)

Turkey’s economy put in another strong performance in Q3 but, as the effects of the recent currency crisis filter through, it is likely to suffer a contraction in Q4. The only crumb of comfort is that the downturn is likely to prove less severe than that which followed the 2018 crisis.   Drop-In: India – How much scarring will the pandemic leave? 10:00 ET/15:00 GMT, Wednesday 1st December https://event.on24.com/wcc/r/3535749/63CC51718846E8FF3D871827AC84AF1E?partnerref=report Drop-In: Why is Asia sitting out the global inflation surge? 09:00 GMT/17:00 HKT, Thursday 2nd December https://event.on24.com/wcc/r/3546145/A9D34EF592141BEFCAC819ADB40359D5?partnerref=report

30 November 2021

Emerging Europe Data Response

Economic Sentiment Indicators (Nov.)

The EC’s Economic Sentiment Indicators for November showed a broad-based rise in industrial sentiment, but services sentiment softened further. With restrictions on activity being re-imposed amid surging virus cases and concern over the new ‘Omicron’ COVID-19 variant, the regional recovery is likely to slow in the coming months.

29 November 2021

Emerging Europe Economics Weekly

Lira crisis, MNB hikes, Ukraine-IMF, Romanian politics

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 https://event.on24.com/wcc/r/3546145/A9D34EF592141BEFCAC819ADB40359D5?partnerref=report

26 November 2021

More from Capital Economics Economist

Japan Economics Weekly

Post-Olympics public spending boost, BoJ holding firm

Japan’s government appears to be lining up a stimulus programme to prevent an economic downturn after the Tokyo Olympics next year. While increased public spending would provide a welcome boost to GDP, we don’t believe there’s any particular reason to expect a post-Olympics slowdown. Meanwhile, the Bank of Japan is bucking the global trend towards additional monetary easing. Unlike some commentators, we don’t think that loosening by other major central banks puts the Bank of Japan’s policy framework under pressure.

21 June 2019

Emerging Markets Economics Chart Book

EM growth running at a three-year low

EM GDP growth slowed to just 3.3% y/y in Q1, its weakest pace since the first half of 2016, and our Tracker suggests that it remained sluggish in Q2. Growth should pick up a little in the second half of the year. Large commodity producers, such as Brazil, Russia and South Africa, are likely to find their feet again after a terrible performance in Q1. And Turkey and Argentina should recover from the downturns caused by last year’s currency crises. But growth will remain weak and, in most cases, our 2019 and 2020 GDP growth forecasts are below consensus.

21 June 2019

Emerging Asia Economics Weekly

Growth continues to weaken, rates to be cut further

After a very weak first quarter that saw GDP growth in many countries drop to a post-financial crisis low, the most recent data suggest growth across Emerging Asia has continued to slow. Weak growth is likely to prompt further interest rate cuts over the coming months across the region. Despite leaving rates unchanged on Thursday, we expect the central banks of the Philippines and Indonesia to loosen monetary policy at their next meetings.

21 June 2019
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