Turkey’s current account has been in surplus for three consecutive months now, but the government’s efforts to speed up the recovery will probably cause the external position to deteriorate again soon. This will put downward pressure on the lira and force the central bank to reverse course on monetary easing around the middle of next year. Elsewhere, Hungary’s economic expansion continued at an impressive pace in Q3, underpinned by loose monetary and fiscal policy. A continuation of this policy mix would soften any slowdown in growth next year, but it would risk storing up bigger problems in the future.
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