EMEA Outlook: Elections Set the Scene in Q2

March 25, 2024 2:00 PM UTC

·     Unlike South Africa and Russia, Turkiye continued with tightening monetary policy in Q1 due to stubborn inflation, pressure on FX and reserves. Meanwhile, Russia and South Africa halted their tightening cycles as of 2024 and will likely start cutting interest rates in Q3 depending on how

Inflationary Pressures Caused CBRT to Restart Tightening Cycle and Hike Key Rate to 50%

March 21, 2024 4:26 PM UTC

Bottom Line: Despite predictions were centred around no change, Central Bank of Turkiye (CBRT) increased the policy rate by 500 bps to 50% on March 21 due to strong inflation, and pressure on FX and reserves lately. According to the CBRT statement, the current level of the policy rate will be mainta

CBRT Left the Key Rate Constant at 45%

February 22, 2024 12:53 PM UTC

Bottom Line: As we predicted, Central Bank of Turkiye (CBRT) ended monetary hiking cycle under new governor, and kept the key rate stable at 45% after eighth straight rate hikes since presidential elections last May. According to the CBRT statement, the current level of the policy rate will be maint

CBRT Started the New Year with a 250 bps Rate Hike

January 25, 2024 11:52 AM UTC

Bottom Line: As we pencilled a 250 bps policy rate hike by Central Bank of Turkiye (CBRT) on January 25 MPC meeting, CBRT continued its monetary tightening cycle by lifting the key rate from 42.5% to 45%. This is the eighth straight rate hike by CBRT since May presidential elections, simply to fight

CBRT Continued Monetary Tightening Cycle on December 21, but with a Lesser Pace

December 21, 2023 12:19 PM UTC

Figure 1: CPI (YoY, % Change) and Policy Rate (%), January 2021 – December 2023
Source: Turkish Statistical Institute, Datastream, Continuum Economics
The CBRT raised the policy rate from 40% to 42.5% on December 21 MPC meeting to establish the disinflation course as soon as possible, to anchor infl

EMEA Outlook: Inflationary Pressures Remain Strong

December 18, 2023 10:01 AM UTC

Our Forecasts
Source: Continuum Economics
Risks to Our Views
Source: Continuum Economics
EMEA Dynamics:  Inflationary Concerns Remain High
EMEA economies continue to be squeezed by macroeconomic problems such as elevated inflation and financial pressures. We think country specific factors, geopolitics,

Moderate Increase in Turkiye’s Inflation in November

December 4, 2023 11:28 AM UTC

Figure 1: CPI (YoY, % Change) and Policy Rate (%), January 2021 – November 2023
Source: Turkish Statistical Institute, Datastream, Continuum Economics
When annual rate of changes (%) in the CPI's main groups are examined in November, we see that housing with 37.5% was the main group with the lowest

Turkish Economy Expands 5.9% in Q3 2023

November 30, 2023 1:40 PM UTC

Figure 1: GDP (%, YoY), Q3 2019 – Q3 2023
Source: Datastream, Continuum Economics
When the activities which constitute GDP are analyzed in Q3, construction sector made the highest contribution to the economy with an 8.1% YoY rise, followed by 5.7% in the industry sector and 5.1% in the financial and

Sixth Straight Rate Hike: CBRT Continued Strong Monetary Tightening

November 23, 2023 12:53 PM UTC

Figure 1: Key Rate (%), September 2020 – November 2023
Source: Datastream
The CBRT raised the policy rate from 35% to 40% on November 23 MPC meeting to establish the disinflation course as soon as possible, to anchor inflation expectations, to control the deterioration in pricing behaviour and to s

Turkiye: Macroeconomic Problems to Limit Long Term Growth

November 10, 2023 10:01 AM UTC

Figure 1: Turkiye GDP Growth Forecasts to 2030 (%) 
Source: Continuum Economics/Datastream
A number of forces impact our long-term growth forecast for Turkiye. 
Figure 2: Turkiye 15+ Population Forecasts to 2030 (Thousand) 
Source: Continuum Economics/Datastream
Figure 3: Turkiye Capacity Utilization

Turkish Inflation Continued Its Spiking Cycle in October

November 3, 2023 8:08 AM UTC

Figure 1: Inflation (YoY, % Change), October 2018 – October 2023
Source: Turkish Statistical Institute, Datastream, Continuum Economics
When annual rate of changes (%) in the CPI’s main groups are examined in October, we see that housing with 25.9% was the main group with the lowest annual increas

CBR Maintains Strong Hawkish Stance by Lifting the Rate to 15%

October 27, 2023 1:34 PM UTC

Figure 1: $/Ruble, October 2022 - October 2023
Source: Datastream
According to the Monetary Policy press release by the CBR today, CBR remained concerned about multiple issues such as higher inflationary pressure seen across an increasingly broader range of goods and services, growing domestic dema

CBRT Continued Strong Monetary Tightening on October 26 MPC

October 26, 2023 3:35 PM UTC

Figure 1: Key Rate (%), September 2020 – October 2023
Source: Datastream 
The CBRT raised the policy rate from 30% to 35% on October 26 MPC meeting to establish the disinflation course as soon as possible, to anchor inflation expectations, to control the deterioration in pricing behaviour and to s

CBRT will Likely Halt Tightening Cycle Transiently on October 26 MPC

October 19, 2023 10:52 AM UTC

Figure 1: Key Rate (%), September 2020 – September 2023
Source: Datastream 
Despite inflation remained on the upside in September (there are still signs that inflation will continue to spike in the upcoming months mostly due to deterioration in pricing behaviour), cost and demand pressures and slo

Turkish Inflation Surged in September, but with a Decelerating Pace Compared to August

October 3, 2023 12:28 PM UTC

Figure 1: Inflation (YoY, % Change), October 2018 – September 2023
Source: Turkish Statistical Institute, Datastream
When annual rate of changes (%) in the CPI’s main groups are examined in September, we see that housing with 20.2% was the main group with the lowest annual increase while hotels, c

Turkiye Struggles its Way out of Current Account Deficits

October 2, 2023 8:05 AM UTC

Figure 1: Decomposition of Current Account Balance (% of GDP), 2022
Source: Turkish Statistical Institute (Turkstat), Central Bank of Republic of Turkiye (CBRT)
Figure 2: Turkish Foreign Trade (Thousand USD), January – August, 2023
Source: Turkish Statistical Institute
Turkiye has continued to recor

EMEA Outlook: Domestic Factors and Geopolitics Dominate Heading to 2024 Election Year

September 28, 2023 7:45 AM UTC

EMEA Dynamics: Domestic Factors and Geopolitics Continue to Dominate the Outlook during 2024 Election Year
EMEA economies continue to be squeezed by the elevated DM interest rates, high oil and certain food prices, EU and China slowdown. However, country specific factors and geopolitics will continue

Tightening Cycle Continues: Key Rate Hiked by 500 bps to 30%

September 21, 2023 3:21 PM UTC

Figure 1: Key Rate (%), September 2020 – September 2023
Source: Datastream 
After CPI rising to 58.9% y/y in August and the outlook for inflation remaining on the upside and there are strong signs that inflation will continue to rise in the upcoming months mostly due to recent hikes in taxes and s

Turkish Inflation Continued to Surge in August

September 4, 2023 1:12 PM UTC

Figure 1: Inflation Outlook (YoY, % Change)
Source: CBRT, Turkish Statistical Institute, Datastream, Continuum Economics
When annual rate of changes (%) in the CPI’s main groups are examined in August, we see that housing with 24.9% was the main group that indicated the lowest annual increase while

Turkish GDP Expands 3.8% in Q2 2023

August 31, 2023 2:41 PM UTC

Figure 1: GDP (%, YoY), Q3 2018 – Q2 2023
Source: Datastream, Continuum Economics
When the activities which constitute GDP are analyzed in Q2, we see that the value added increased by 6.4% in services, 6.2% in construction, 5.1% in public administration, education, human health and social work activ

Strong Move by CBRT: Key Rate Hiked by 750 bps to 25%

August 24, 2023 1:00 PM UTC

Figure 1: Key Rate (%), August 2021 – August 2023
Source: Datastream 
After CPI rising to 47.8% y/y in July and the outlook for inflation remaining on the upside, CBRT immediately decided to lift its inflation projection from 22.3% to 58% for 2023 in July. In addition, as there are strong signs th

Turkiye’s Path Towards the End of 2023 is Bumpy

August 17, 2023 9:54 AM UTC

Figure 1: CPI (%, YoY) and Policy Rate (%), January 2020 – July 2023
Source: Datastream 
Inflation remains as the core problem which should be addressed as cost of living bites Turkish citizens. With CPI inflation coming in at 47.83% y/y in July, the outlook for inflation remains on the upside (Fi

Turkiye is Expected to Hike Key Rate to 20% on August 24 as Inflation Bites

August 16, 2023 10:12 AM UTC

Figure 1: CPI (%, YoY), January 2021 – July 2023
Source: Datastream 
First, with CPI inflation coming in at 47.83% y/y in July, the outlook for inflation remains on the upside (Figure 1). We predict that inflation will continue to surge in the upcoming months mostly due to recent hikes in taxes a

Turkish Inflation Surged Drastically in July

August 3, 2023 10:10 AM UTC

Figure 1: Inflation Outlook (YoY, % Change)
Source: CBRT, Turkish Statistical Institute, Datastream, Continuum Economics
When annual rate of changes (%) in CPI’s main groups are examined in July, we see that housing with 19.3% was the main group that indicated the lowest annual increase while hotels

Turkiye is Expected to Continue Monetary Tightening in 2023 as Inflation is Projected to Soar

July 27, 2023 3:44 PM UTC

Figure 1: CBRT Rates and Short-Term Interest Rates (%)
Source: CBRT, Borsa Istanbul 
First, as we reiterated in our previous analysis (here), we think the outlook for inflation is on the upside, and inflation will steeply surge in the upcoming months mostly due to recent hikes in taxes and salaries,

Turkish Inflation is Expected to Soar in July

July 26, 2023 1:35 PM UTC

Figure 1: Inflation Outlook (YoY, % Change)
Source: CBRT, Turkish Statistical Institute, Datastream, Continuum Economics
First, recent inflationary pressures recently prompted the government to raise the minimum wage by 35% to 11,500 TRL per month on June 20 for the second half of the year. Civil ser

Turkiye Continued Monetary Tightening by Increasing Policy Rate to 17.5% on July 20

July 20, 2023 2:38 PM UTC

CBRT announced its policy rate decision on July 20, and decided to continue monetary tightening with another hike after June, in continued moves to fight inflation. (Note: The CBRT increased its policy rate by 650 basis points in June to 15%). The expectations were wide before the rate decision: Re

Turkiye's Latest Rate Hike to 15% Signals Hesitant Return to Orthodox Policies

June 27, 2023 2:17 PM UTC

The major reasons behind the hike were to curb the difference between the policy rate and market loan rates and FX forward rates which have been way above the current policy rate, to tackle the inflation rate which has been stubbornly high recently and stimulate foreign capital inflows. The authorit

EMEA Outlook: Domestic Factors Dominant

June 21, 2023 8:03 AM UTC

EMEA Dynamics: Deteriorating Macro Picture Cannot Steal the Stage from Politics and Geopolitics
EMEA economies continue to be squeezed by elevated DM interest rates as the growth trajectories decrease for most countries for 2023. Soaring DM interest rates have different effects across the three key c

Turkey Rating Downgrades — Another Call to Reality to Be Ignored

August 16, 2022 12:12 PM UTC

Figure 1: Central Bank of Turkey (CBRT) International Reserves
Source: CBRT, Continuum Economics
Moody's downgraded Turkey's long-term issuances to B3 (six notches below investment grade) from B2 and changed the outlook to stable from negative. This follows Fitch's downgrade last month to B (five notc