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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.
Jason Tuvey Senior Emerging Markets Economist
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Emerging Europe Data Response

Central & Eastern Europe GDP (Q1 2022)

Q1 GDP figures for Central and Eastern Europe smashed expectations in Poland, Romania and Hungary and suggest that their economies were running hot at the start of the year. The war in Ukraine will dampen activity in Q2, but demand is likely to remain strong which will keep wage and inflation pressures elevated and require central banks to raise interest rates further than most expect this year. EM Drop-In (17th May): Do current EM debt strains point to a repeat of the kinds of crises seen in the 1980s and 1990s? Join our special briefing on EM sovereign debt risk on Tuesday. Register now.

17 May 2022

Emerging Europe Data Response

Israel GDP (Q1 2022)

The 1.6% q/q annualised contraction in Q1 GDP in Israel was weaker than analysts expected, but it was more or less in line with our forecast and doesn’t change the bigger picture that Israel’s economy is operating in line with its pre-pandemic trend. With inflation rising and the labour market tightening, we expect the central bank to raise interest rates from 0.35% now to over 2% next year. EM Drop-In (17th May): Do current EM debt strains point to a repeat of the kinds of crises seen in the 1980s and 1990s? Join our special briefing on EM sovereign debt risk on Tuesday. Register now.

16 May 2022

Emerging Europe Data Response

Russia Consumer Prices (Apr.)

Russian inflation came in broadly as expected in April, rising from 16.7% y/y to a two-decade high of 17.8% y/y and it looks like further increases in the coming months will be modest. This will prompt the central bank to unwind its emergency interest rate hike further, with a 200bp rate cut next month. EM Drop-In (17th May): Do current EM debt strains point to a repeat of the kinds of crises seen in the 1980s and 1990s? Join our special briefing on EM sovereign debt risk on Tuesday. Register now.

13 May 2022

More from Jason Tuvey

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

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 as other regulatory measures, which supported a recovery in currencies. But it seems unlikely that policymakers in Turkey will follow this script.

24 November 2021

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 falls in the lira are likely to lie in store and we think that it will probably take the emergence of severe strains in the banking sector before policymakers respond with aggressive policy tightening. We aren’t there yet.

23 November 2021
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