Turkish Economy

Delay in simplification a prudent move

As expected, the CBRT kept its 1w repo rate on hold at 7.5% at yesterday’s MPC meeting, while it also left the interest rate corridor untouched by leaving the overnight borrowing and lending rates at 7.25% and 10.75%, respectively. The CBRT was expected to leave…

Market friendly move is not to move

The CBRT will hold its MPC meeting tomorrow and announce its policy rate decision at 14:00 local time. We expect the CBRT to remain on hold and refrain from initiating simplification due to increased volatility in global financial markets. Recall that the CBRT listed…

Agriculture behind the higher unemployment rate

The unemployment rate in October (which is calculated based on the average of September, October and November) was 10.5%. This is higher than both the market consensus expectation of 10.3% and last October’s 10.4%. In addition, the youth…

Inflation expectations continue to worsen

Inflation expectations continue to deteriorate, mainly due to the higher than expected reading at end 2015 and tax and wage hikes at the very beginning of the year. Survey participants expect inflation to end this year at 8.2%, while inflation expectations…

Capital outflows reach alarming levels

The current account registered a $2.1 bln deficit in November, close to the market consensus ($2.0 bln) and our forecast ($2.2 bln). As expected, on a 12m rolling basis the deficit further declined to $34.7 bln (4.7% of GDP) from $38.4 bln (5.5%) a month before…

Revised Medium Term Program

Yilmaz and Finance Minister Naci Agbal today announced a new medium term economic program. The program seems to be more realistic than before about inflation, although the target is still below our forecast of more than 8%. In addition, it is good to see the government committing…

Moderate yet not bad production in November

Industrial production expanded 3.5% y-o-y in November in calendar-adjusted terms, below the market consensus of 4.3%. In unadjusted terms, industrial production grew 3.6%, which was also below the consensus (5.3%). However, the first two months of the…

Foreign investors’ position in Turkey

Annual outflow is $9.6 bln

Foreign investors sold $15 mln worth of shares in Turkish equities and $179 mln in government bonds in the week ending December 31 with inflation concerns domestically as well as declining global risk appetite…