The economies of Turkey and Poland will suffer most in major emerging markets from the fallout of Russia’s war on Ukraine, S&P Global reported on Monday, according to Reuters.
S&P cut its forecast for Turkey’s economic growth this year by 1.3 percentage points to 2.4 percent. Poland’s economy was expected to expand by 3.6 percent compared with 5 percent previously, it said. They were the biggest declines in S&P’s estimates for major emerging markets outside of Russia.
Countries in emerging Europe are the most vulnerable to the economic fallout from the war because of trade, financing, and confidence, S&P said. Major energy importers were also hit most by a spike in prices, it said.
Turkey’s growth estimate was downgraded due to dimming trade prospects and a slowdown in retail sales. Turkey imports nearly all of the oil and natural gas that it consumes.
“Rising food and energy prices and the weaker currency will worsen an already dire inflation outlook,” S&P said, according to Reuters. It estimated annual inflation at 55 percent this year.
Inflation in Turkey accelerated to 54.4 percent in February after the government ordered the central bank to cut interest rates late last year and investors and locals sold the lira in droves due to concerns about economic policy. Most economists expect inflation to pick up speed before slowing towards the end of the year.
The lira slumped by 44 percent against the dollar last year. It has lost another 10 percent of its value this year. It was trading down 0.1 percent at 14.83 per dollar on Tuesday.