Publications

The Recovery and Resilience Facility (RRF), the centrepiece of the Next Generation EU (NGEU) instrument, has become the European Union (EU) economic policy coordination priority. This has made it necessary to temporarily simplify the European Semester. To gain access to the RRF, the Member States (MSs) have to set out the investments and reforms to which the funds will be assigned in their national recovery and resilience plans (RRPs) and which must be aimed fundamentally at responding to climate change-related challenges, digitalisation, the strengthening of human capital and public sector efficiency. The assessment of these plans by the European Commission (EC) will be central to the EU annual economic policy coordination cycle within the European Semester, which retains the habitual Excessive Deficit and Macroeconomic Imbalance procedures.

Since March 2020, the world’s major economies have approved financial and regulatory measures to limit the impact of the health crisis on both the overall economy and their respective financial systems. This paper summarises the measures implemented by countries outside the European Union and the euro area that are considered material for the Spanish banking system (the United Kingdom, the United States, Mexico, Brazil, Turkey, Chile, Peru and Colombia). It focuses particularly on the measures that remain in force, both those attempting to support the most vulnerable sectors affected by the pandemic (moratoria on loans to households, firms and other entities) and those intended to encourage lending and to support the financial system. The former set of measures has already expired in the vast majority of the countries considered, although some temporary easing of the solvency and liquidity requirements applicable under normal conditions remains in effect. Nonetheless, these measures will foreseeably come to an end in the near future (e.g. the reduced countercyclical buffer requirements and the deferred implementation of accounting and prudential standards).

In 2021, the Turkish economy continued to be highly influenced by the course of the COVID-19 pandemic. Turkey has been more dynamic than other emerging economies since the start of the pandemic, but faces a number of macro-financial challenges as a result of imbalances that have become more acute during the crisis. These include, notably, high and persistent inflation, sizeable external financing needs (non-financial corporations have high levels of foreign currency-denominated debt), low international foreign currency reserves and growing bank deposit dollarisation. The banking sector remains relatively sound and its NPL ratio has declined, although some of its other indicators, such as profitability and solvency ratios, have slightly worsened.

As in other countries, the effect of the pandemic and the global recession on the Turkish economy was mitigated by the fiscal, financial and monetary support implemented by the country’s authorities. In fact, Turkey was one of the few economies of significant size to record positive GDP growth in 2020 as a whole. However, this policy support also exacerbated the pre-existing macroeconomic imbalances. First, the sharp increase in credit is among the determinants behind the growth in domestic demand. Second, a notable weakening of the lira was observed, leading the already-high inflation rate to rise further. However, in the final stretch of the year the Turkish central bank shifted towards more orthodox monetary policy, helping to restore – at least in part – investor confidence. The banking sector has remained healthy, although overall asset quality has deteriorated as exposure has increased.