Most recent posts from Türkiye

Consumer inflation came in at 1.84% m/m, below our forecast (2.3%) and consensus (2.2%), bringing annual inflation down to 29.7%, also on base effects. Energy outlook poses upside risks, while weaker demand provides some offset. We keep our 30% year-end inflation forecast, with slight downside risk after the latest print.

Credit growth continues to lose momentum as macroprudential restrictions remain the key sector driver. We continue to expect 2026 ROE at around 25%, with risks tilted to the downside. Further decline in TL funding costs should support margins, although slower loan growth and rising costs may constrain the ROE recovery.

Global defense demand is structural, driven by tensions, rising budgets and new warfare. Europe faces gaps in air defense, drones, long-range fires and ammunition, while Türkiye can complement it through co-production and supply-chain partnerships. Future competitiveness will depend on AI, autonomy, cyber and space.

The CBRT again kept the policy rate and the interest corridor unchanged at 37% and 35.5-40%, respectively, in line with the market consensus. Following the CBRT’s earlier and faster-than-expected easing as of August 23rd, today’s decision appears to signal caution amid the renewed rise in energy prices.

The Turkish economy grew by 2.3% y/y in 2Q26, below both our expectation (3%) and market consensus (2.9%), bringing growth in 1H26 to 2.5% y/y. Assuming a prudent policy mix going forward and no further escalation in geopolitical tensions, we maintain our 3.0% GDP growth forecast for 2026 with limited downside risks now.

In spite of the conflict, 2Q26 growth could surprise to the upside relative to our previous forecast as our monthly GDP indicator nowcasts 3.0% y/y growth for 2Q26, indicating a quarterly growth of around 1.0–1.5%. We keep our 2026 GDP growth forecast at 3.0%, with geopolitical tension as the key downside risk.

The CBRT again kept the policy rate and the interest corridor unchanged at 37% and 35.5%-40%, broadly in line with market expectations. This marks the fifth consecutive month in which funding has continued through the overnight lending rate (40%).