Quick In-Depth Turkish Economy Outlook
This Quick Research Covers The Latest Incidents & What Led The Turkish Lira To Reach Its All-Time High.
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To Members.
Despite the fact that foreign financial organizations raised their estimates of the Turkish economy, the Turkish Lira reached all-time highs, so what are we missing?
At the Times of the Press BIST Indices⤵️⤵️
The Turkish lira fell to a record low overnight after President Erdogan of the AKP made the decision to dismissed 2 vice presidents of the Central Bank hours after meeting with Central Bank Governor Şahap Kavcıoğlu.
This was my prediction in May Take a look
You probably asked yourself, “when does dismissing Gov’t officials caused a currency tumble like Turkey? & Is Turkey really in economic mayhem?”
Let’s roll back and see what we missed shall we?
Interest Rates
Last month, Turkey's central bank reduced its benchmark policy rate from 19% to 18%, surprising many economists and analysts who had expected the CBRT to keep interest rates at 19%, where they had been since Q1 of 2021, despite rising inflation.
Furthermore, the central bank stated that it was committed to strengthening the macro-prudential policy framework in order to control the growth of personal loans. Policymakers noted that the increase in inflation was still temporary and was driven by a rise in food and import prices as a result of supply constraints and an expansion in demand following the economy's reopening.
We expect inflation to ease to a still high 16.9% by end-2021, due to a favourable base effect and slowing domestic demand. The latter will be partly due to a marked slowdown in credit growth due to tighter financial conditions, the phasing out of 2020 credit stimulus and the introduction of macroprudential measures targeting retail loan growth. The potential for additional depreciation pressures, further deterioration in inflation expectations and indexation mechanisms such as wage agreements increase inflationary risks. We forecast inflation to average 14.6% and 11.8% in 2022-2023, remaining multiples above the forecast 3.4% 'BB' median. “Fitch Ratings Reports”
Fitch revised its previous negative “Feb 19 report” to stable.
Barclays also expects Turkey's central bank to slash interest rates to 15% in Q4 following last month’s surprise rate cut, adding it expects the lira to face more pressure.
According to the latest analysis of the international rating agency Fitch Ratings, Turkey will gain the most from the European supply chain changes. Recently, many international companies operating in the major industries such as food, medicine, furniture & electronics have announced their new investment plans for Turkey, which has a strong logistics infrastructure and industrial capacity.
Import & Export
According to preliminary data produced with the cooperation of the Turkish Statistical Institute(TÜIK) and the Ministry of Trade, exports were 17 billion 850 million dollars in December 2020, a 16% increase over December 2019, and imports were 22 billion 381 million dollars, an 11.6% percent increase over December 2019.
In January-December 2020, exports fell by 6.3% while imports rose by 4.3%.
Turkey had a total export of 180,835,909.57 in thousands of US$ and total imports of 210,343,464.86 in thousands of US$ leading to a negative trade balance of -29,507,555.29 in thousands of US$ The Effectively Applied Tariff Weighted Average (customs duty) for Turkey is 3.13% and the Most Favored Nation (MFN) Weighted Average tariff is 5.09%.The trade growth is -0.82% compared to a world growth of -1.13%. GDP of Turkey is 761,428,183,369.17 in current US$. Turkey services export is 63,590,000,000 in BoP, current US$ and services import is 28,062,000,000 in Bop, current US$.Turkey exports of goods and services as percentage of GDP is 32.74% and imports of goods and services as percentage of GDP is 29.94%. — According to WITS
In August 2021, the overall import volume index compared to the corresponding month of the preceding year decreased by 2.7%. The index for food, beverages and tobacco, crude materials (except fuels), fuels and manufactured goods (except food, beverages and tobacco) increased by 45.2%, 16.3%, 27.9% and 8.6%, respectively. — Source: Tüik
Click to view CPI According to CBRT
Real Estate
The number of house sales to foreigners has increased in Turkey as a result of legislative changes that eased citizenship with investment limits for foreigners, campaigns launched by real estate developers and banks, and the currency depreciating at an unprecedented rate since 2018.
According to reliable sources, Istanbul, the country's most populous city, has remained the top choice for foreign buyers. In September 2019, residential property sales to foreigners in the city increased by 7% year on year to 1924, compared to 1799 in September 2019. When it comes to nationalities, however, Iraqi citizens continue to top the list of foreign buyers in residential properties. Official data showed that Iranians topped the list of buyers in the first quarter with 1,599 properties. Iraqis followed with 1,461 units, Russians 938 units, Afghans 700 units, and Kazakhs 354 units.
In March, foreign property sales increased by 39% YoY to 4,285 units.
Conclusion
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