Russia’s fiscal pressures, Turkey’s policy shift on thin ice

A raft of comments from senior policymakers at the Russian Ministry of Finance this week highlight the pressures that the public finances are under. For now, policymakers are responding by tightening fiscal policy, but a key risk is that the war effort forces the finance ministry to run much larger deficits. This would erode the current account surplus and put Russia’s macroeconomic resilience under greater threat. Elsewhere, if the Turkish central bank’s rate hikes continue to underwhelm – as happened again this week – investors may soon lose confidence in the shift towards orthodox policymaking.