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Turkey’s domestic recovery & Hungary’s new super bond

GDP and inflation figures released out of Turkey this week provided familiar signs that growth is increasingly unbalanced and we think that the central bank will ultimately be forced to reverse its easing cycle later next year. Meanwhile, demand for Hungary’s new “super government bond” has been strong but it hasn’t resulted in the rise in household savings that many had expected and we think that its potential dampening effect on consumption is overstated.
William Jackson Chief Emerging Markets Economist
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Emerging Europe Economics Weekly

Governments collapse, Russia set to default

Governments in Israel and Bulgaria collapsed this week which may delay support to households over the cost of living. The threat to Bulgaria’s economy is probably greater, as political instability also puts EU fund inflows and the ability to secure gas supplies at risk. Elsewhere, a 30-day grace period for Russia’s government to make interest payments on Eurobonds ends on Sunday. While Russia has signalled that it is willing to make the payments in rubles, this would be a breach of the contract and could mark Russia’s first default on foreign currency debt since the Bolshevik revolution.

24 June 2022

Emerging Europe Economics Update

CBRT: knock knock, anybody there?

High inflation, falls in the lira and aggressive monetary tightening elsewhere are clearly not enough to persuade Turkey’s central bank to lift interest rates, as it left its policy rate at 14.00% today. Disorderly falls in the lira are a major risk, which would probably be met with capital controls rather than rate hikes.

23 June 2022

Emerging Europe Economics Update

CEE inflation broadening out

Central and Eastern European economies are experiencing their worst bout of inflation since the late-1990s as surging food and energy prices have added to strong core price pressures across a broad range of goods and services. Monetary tightening cycles are likely to continue with interest rates rising to 8% or so over the next few months and we think that rates will remain above neutral for several years. World with Higher Rates - Drop-In (21st June, 10:00 ET/15:00 BST): Does monetary policy tightening automatically mean recession? Are EMs vulnerable? How will financial market returns be affected? Join our special 20-minute briefing to find out what higher rates mean for macro and markets. Register now  

20 June 2022

More from William Jackson

Latin America Data Response

Brazil Industrial Production (Apr.)

The worse-than-expected 1.3% m/m decline in Brazilian industrial production in April is likely to be followed by a partial recovery last month. That said, the latest surveys suggest that activity in the industrial sector hasn’t picked up to the same extent as other parts of the economy.

2 June 2021

Latin America Data Response

Brazil GDP (Q1 2021)

The 1.2% q/q expansion in Brazil’s GDP suggests that the economy held up well during the country’s second virus wave and more timely figures point to a rapid recovery from the more recent third wave. These figures will keep the central bank on track to hike the Selic rate by a further 75bp (to 4.25%) when it meets in June and it looks increasingly likely that it will flag another 75bp hike in August too.

1 June 2021

Emerging Markets Trade Monitor

A closer look at the EM export boom

EM exports are set to hit a new high in Q2, which will help to support economic growth, particularly in East Asia where virus cases are hitting domestic economies. While EM exports are likely to come off their current highs, they will probably stay at elevated levels throughout the rest of the year.

27 May 2021
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