Bi-Weekly Report 25 May - 7 June 2021

Against the backdrop of a strong carry-over effect from the ultra-accommodative monetary policy carried out throughout most part of 2020, the Turkish economy posted another quarter of robust GDP growth (up 7.0% y-o-y in Q1:21)

The (new) spike in FX volatility, reflecting fears of a premature and frontloaded easing in monetary policy, is due to take a toll on economic activity during the remainder of the year

The budget deficit is set to narrow to a still high 6.8% of GDP in FY:21, suggesting the need for further serious fiscal consolidation

Despite an increasingly challenging backdrop, the large interest rate differential between Romania and its peers should allow the NBR to delay any tightening until mid-2022

Political continuity is expected to be maintained after the elections, despite possible delays in policy implementation