Source: Türkiye İş Bankası
Turkey’s economic outlook on monthly basis based on main indicators, monetary policy and anticipatory meetings.
The announcement that the US and China would sign the first phase of the trade agreement on January 15, based on the consensus reached in October 2019, supported the markets. On the other hand, the US-Iran tension escalated with the killing of the Iranian general in the first days of the year put pressure on the risk appetite. Oil and gold prices started the year with steep rises due to geopolitical developments. Gold prices hit the highest level since April 2013 on January 6 with 1,583 USD/ounce. The US third quarter GDP growth was confirmed at 2.1%. The recent data releases draw a broadly positive picture of the US economy. At the last monetary policy meeting of 2019, the Fed kept the policy rate at 1.50-1.75%. While there was no revision in the growth and inflation forecasts of the Fed members, 13 out of 17 Fed members predicted that the policy rate will remain at the current level next year. In Euro Area, manufacturing data for the last quarter of 2019 displayed a weak picture, while inflation recovered slightly. ECB did not change interest rates at its first meeting, chaired by Christine Lagarde. The notes released after the meeting did not differ from that of the previous meeting supporting the views that the new Chair will maintain the current monetary policy stance. In China, policy makers are taking new measures to support the economy. The Central Bank of China has cut the reserve requirement ratios for the eighth time since the beginning of 2018, while the China’s State Council has announced new employment incentives.
In September 2019, unemployment rate increased by 2.4 points compared to the same period of 2018 and became 13.8%. Following September, the calendar adjusted industrial production index increased also in October on an annual basis. The index expanded by 3.8% in this period. In December, manufacturing PMI in Turkey was unchanged compared to November at 49.5 remaining below the threshold level for the third consecutive month. In November, export volume had a flat course compared to the previous year and reached 15.5 billion USD, while import volume increased by 9.7% to 17.7 billion USD. Thus, foreign trade deficit continued to expand rapidly and reached 2.2 billion USD in November. Having improved since June 2018, 12-month cumulative current account balance worsened for the first time after 16 months in October. After reaching a historic high level of 5.4 billion USD in September, 12-month current account surplus decreased to 4.3 billion USD in October. The central government budget posted a surplus of 7.8 billion TRY in November. During this period, budget revenues expanded by 1.7% yoy to 83.3 billion TRY, while budget expenditures increased by 1.6% to 75.5 billion TRY. In January-November, budget deficit surged by 70.4% yoy to 92.9 billion TRY. CPI increased by 0.74% mom in December. Annual CPI inflation was at 11.84%. CBRT lowered its policy interest rate from 14% to 12% in December meeting.”