Turkey GDP (Q2 2021)

A strong rebound from May’s three-week lockdown meant that Turkey’s economy managed to expand by 0.9% q/q over Q2 as a whole and the early signs are that it carried this momentum into Q3. Robust growth and high inflation mean the central bank will hold off cutting rates until late this year.
Jason Tuvey Senior Emerging Markets Economist
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Emerging Europe Economics Weekly

Surging virus cases and the re-imposition of lockdowns

A renewed wave of COVID-19 cases has prompted some governments to reimpose strict containment measures across Emerging Europe and talk of lockdowns is now becoming more widespread. The experience so far during the pandemic is that tighter containment measures need not result in a large hit to activity. But the latest virus waves add to the growing near-term headwinds in the region from rising inflation and supply disruptions to industry and we think that recoveries will slow sharply in Q4.

22 October 2021

Emerging Europe Economics Update

CBR accelerates its tightening cycle again

Russia’s central bank (CBR) stepped up the pace of its tightening cycle again at today’s meeting with a larger-than-expected 75bp interest rate hike, to 7.50%, and the hawkish tone of the accompanying communications suggest that further tightening will be needed. We think the policy rate will be hiked to 8.25% by year-end and remain higher than most expect throughout 2022.

22 October 2021

Emerging Europe Economics Update

CBRT now playing with fire after aggressive rate cut

Any remaining confidence in the credibility of Turkey’s central bank (CBRT) was shattered after today’s larger-than-expected 200bp interest rate cut, to 16.00%. The lira hit a fresh record low against the dollar and we think that it will continue to weaken as President Erdogan piles on the pressure for further easing. The risk of another balance of payments crisis akin to that in 2018 will continue to grow.

21 October 2021

More from Jason Tuvey

Middle East Economics Weekly

Egypt’s COVID outbreak, Tunisia’s president tightens grip

Fears are growing that Egypt is on the cusp of a fresh wave of COVID-19 driven by the Delta variant, but past experience suggests that restrictions will remain light touch and there is growing hope that the vaccine rollout will speed up in the coming months. Elsewhere, Tunisia’s President Kais Saied appears to be tightening his grip on power and leading the country back towards autocracy. As well as the risk that this pushes Tunisia closer to a debt restructuring, the fresh erosion of the country’s institutions will weigh on long-term economic prospects.

26 August 2021

Emerging Europe Economics Update

COVID-19 outbreaks diverge, booster shots rolled out

The past month has seen a growing divergence in COVID-19 outbreaks across the region, with cases still very low in Central Europe but surging in Israel and Turkey. Either way, it appears that restrictions will remain light touch and economic recoveries should stay on track. But studies showing that vaccine efficacy fades over time mean that booster shots look set to become the norm.

23 August 2021

Middle East Economics Weekly

Gulf and oil prices, Egypt remittances, PIF’s Call of Duty

The latest drop back in oil prices is unlikely to be of much concern to policymakers in the Gulf and we still think that there is a window of opportunity for fiscal policy to be loosened. Elsewhere, remittances into Egypt have held up well during the pandemic but this is unlikely to be enough to prevent falls in the pound. Finally, Saudi Arabia’s Public Investment Fund (PIF) raised its stake in a major US video game producer this week although foreign acquisitions may become rarer as the PIF heeds the call to support domestic projects.

19 August 2021
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