Emerging Europe Economics Update Turkey: how strong is the fiscal picture? Turkey’s public finances have become more vulnerable to falls in the currency in recent years, although we think the likelihood of sovereign default is very low. Perhaps the bigger risk for the public... 25th November 2021 · 3 mins read
Emerging Europe Economics Update Macro fundamentals to support further shekel strength The Israeli shekel has appreciated sharply in the past few weeks, making it one of the best performing currencies during the pandemic. While we don’t expect this recent strength to continue in the... 24th November 2021 · 4 mins read
Emerging Europe Economics Update Turkey & policy responses during past “sudden stops” The Turkish lira’s sharp fall yesterday looks similar to the experience of sudden stops elsewhere. In those instances, central banks usually responded with interest rate hikes of around 600bp as well... 24th November 2021 · 3 mins read
Emerging Europe Economics Update Cyclical pressures set to keep CEE inflation elevated Inflation across Central and Eastern Europe (CEE) has continued to surge and now sits at its highest level in around 20 years. This can be partly attributed to global factors, such as rising energy... 24th November 2021 · 4 mins read
Emerging Europe Economics Update Lira in freefall as policymakers remain defiant The Turkish lira has plunged this morning after President Erdogan signalled yesterday that policymakers have no appetite to respond to the currency’s recent falls by hiking interest rates. Further... 23rd November 2021 · 3 mins read
Emerging Europe Economics Update BoI offers no new guidance, 2022 rate hike still in play The Bank of Israel (BoI) left its policy rate on hold at 0.10% as expected at its meeting today, confirmed that it will end its bond purchase programme next month and emphasised that it will continue... 22nd November 2021 · 2 mins read
Emerging Europe Economics Update Assessing the risks in Turkey’s banking sector Turkey’s banks are generally in a good position to cope with sharp falls in the lira: they have large capital buffers to deal with a rise in non-performing loans, off-balance sheet instruments to... 22nd November 2021 · 5 mins read
Emerging Europe Economics Update Lira sell-off and lessons from other “sudden stops” The fresh falls in the Turkish lira following the CBRT’s interest rate cut today have left Turkey firmly in crisis territory and echoes of previous “sudden stops” during major EM currency crises in... 18th November 2021 · 3 mins read
Emerging Europe Economics Update CBRT defies investors with rate cut, crisis risks mount The sharp falls in the lira over the past few days clearly weren’t enough for Turkey’s central bank to stand up to President Erdogan as it pushed ahead with a 100bp cut (to 15.00%) to its one-week... 18th November 2021 · 3 mins read
Emerging Europe Economics Update All eyes on CBRT as Turkish lira continues to tumble There has been no let up for the Turkish lira today and all eyes are turning to the central bank’s interest rate decision tomorrow. Policymakers’ increased tolerance to falls in the lira as well as... 17th November 2021 · 4 mins read
Emerging Europe Economics Update MNB drops a bombshell as it pledges faster tightening Investors were initially disappointed following the decision by Hungary’s central bank (MNB) to raise its base rate by only 30bp (to 2.10%) today, but the hawkish post-meeting communications and a... 16th November 2021 · 3 mins read
Emerging Europe Economics Update Turkey: threat of currency crisis continues to grow The Turkish lira has remained under significant pressure at the start of this week and there is a growing risk that the central bank’s continued obedience to pressure from President Erdogan for... 16th November 2021 · 6 mins read
Emerging Europe Economics Update Fiscal policy in Israel set to lose its punch The phasing out of crisis support and strength of tax revenues have boosted Israel’s public finances and the conservative stance of last week’s budget will help to narrow the deficit towards 3% of GDP... 11th November 2021 · 5 mins read
Emerging Europe Economics Update Rate hikes to take some heat out of growth and inflation The sharp tightening of monetary policy in the region will strengthen the preference for savings, dampen lending growth and raise debt servicing costs next year. It is plausible to think that higher... 9th November 2021 · 5 mins read
Emerging Europe Economics Update Long road ahead for CEE auto producers Auto producers in Central and Eastern Europe (CEE) have experienced intermittent factory closures in the second half of this year and things may get worse before they get better. Motor vehicles... 5th November 2021 · 4 mins read
Emerging Europe Economics Update CNB slams its foot on the brakes with monster rate hike The Czech National Bank (CNB) shocked everyone with a 125bp interest rate hike at today’s meeting and while this was clearly intended to front-load tightening, the hawkish communications suggest that... 4th November 2021 · 2 mins read
