CEEMEA Week Ahead: CPI in RO, IL and PL; Current Account in Türkiye

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CEEMEA Week Ahead: CPI in RO, IL and PL; Current Account in Türkiye

Goldman Sachs CEEMEA Week Ahead

three main factors driving the expected decline are: 1) broad-based base effects across

the CPI basket; 2) we still expect to see passthrough effects from the Shekel’s previous

sharp appreciation, although it has weakened somewhat in the past month; and 3) weak

food inflation pressures, reflecting a broader regional pattern in recent months. We

expect core inflation to be broadly stable, and remain in the bottom half of the BoI’s

+1.0-3.0% target range.

Türkiye: Current Account Deficit to Narrow to US$1.0bn in May, Reflecting a

One-Off Decline in Core Goods Imports

May BoP data will be released in Türkiye on Monday 13 July. We expect the current

account deficit to narrow from US$5.7bn in April to US$1.0bn in May (consensus:

US$1.05bn deficit), mainly on a US$6bn fall in core goods imports by our estimates, with

energy and gold imports broadly stable. However, preliminary June merchandise data

suggest May’s import compression was fully reversed in June; core goods imports rose

by US$7bn, widening the overall trade deficit to US$4.4bn again. Although the aggregate

core trade deficit narrowed slightly in Q2 as exports recovered and imports softened,

we do not think the current account outlook has materially improved. We expect export

weakness to persist through the rest of the year and the core trade deficit to widen

further, albeit at a slower pace as external demand recovers from its Q1 trough. We

therefore expect the 12-month rolling current account deficit to widen from 2.2% of

GDP currently to 3.5% by year-end. On the financial account, we expect May to show

outflows of close to US$5bn, consistent with a US$6bn decline in TCMB FX assets after