Turkey past the worst
The batch of Turkish economic data for February, released this week, provided further evidence that the economy has passed the trough. Industrial output rose by a stronger-than-expected
1.3 percent m/m, while retail sales increased by 0.8 percent m/m. Those came on the heels of m/m rises recorded in January too. We’ll get a firmer idea of how growth shaped up in Q1 when March’s activity figures are released. But as things stand, it appears that GDP may have grown by around 0.5-0.8 percent q/q in Q1. That said, we doubt this will mark the start of a rapid recovery. The return to growth in Q1 was supported by fiscal stimulus ahead of March’s local elections, which will fade. Corporates and households are set to deleverage. And the weak labor market, shown by the rise in the unemployment rate to a decade high of 14.7 percent, will dampen the consumer recovery. Aside from Ukrainian elections, the key events next week will be interest rate decisions in Russia and Turkey. Both central banks are likely to leave interest rates on hold.