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Turkey
 
Chief Economist
The Turkey unit, led by Álvaro Ortiz, forms part of the Asia, MENA and Geostrategy unit, is responsible for monitoring the Turkish economy from an economic and geostrategic perspective.

Latest Publications

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Turkey | Sticky Inflation

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Consumer inflation recorded 0.99% (mom) in March, in line with the market expectation (1%) but higher than ours (0.75%) on the discrepancy due to surprising food inflation.Recent exchange rate depreciation, upward risks on growth and high inertia (backward and forward looking) obviously create upside risks for our year end 9% forecast.

Available in English

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Turkey | GDP grew 7.4% in 2017

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GDP grew by 7.3% (YoY) in 4Q17 above both the market consensus and our expectation (6.7%). The upward revision of the first three quarters and stronger than expected Q4 resulted in 7.4% yoy growth in 2017 (3.2% in 2016).We maintain our expectation that GDP growth may normalize to 4.5% in 2018 due to tightening financial conditions with some upside risks.

Available in English

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Turkey | Revised IP series better fits GDP

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IP grew by 12% yoy (cal. adj.) in January (up from 10.7% in 4Q17) above the market consensus of around 7%. IP data is revised with 2015 as the new base year. The new IP portraits a higher correlation (94%) with the new GDP series and a higher growth performance after 2010 (2.5pp on average).

Available in English

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Turkey | Quarterly Banking & Financial Stability Monitor. March 2018

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The Turkish banking sector experienced a strong credit growth in 2017 due to the macro-prudential polices implemented together with the public incentives and the Credit Guarantee Fund supports. Starting in 4Q 2017, credit growth stabilized as a result of the normalization in credits; and stands at around 19% as of end of February’2018.

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Turkey | The CBRT stays on hold and keeps the tone tight

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The CBRT kept its policy rates unchanged in line with expectations. In our view, the CBRT should stay tight until inflation outlook proves to contain inflation expectations and remain ready to act if inflation deviates further from their latest inflation projection path.

Available in English

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Turkey | Slightly higher than expected inflation

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Consumer prices increased by 0.73% (mom) in February, higher than both our and market expectation (0.6% and 0.5%, respectively). Along with base effects, the overall impact helped annual CPI to fall to only 10.26% from 10.35%. The headline may exercise between 9.5-10% till June and worsen further during summer before falling to around 9% on base effects at the end of 2018.

Available in English

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Turkey | Monthly Economic Monitor. February 2018

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Preliminary data signals only a smooth moderation in economic activity at the start of the year. Base effects on inflation started to help in January. The Central Bank remains tight, while fiscal policy stays accommodative on continuing high expenditures and recently announced incentives

Available in English

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Turkey | Activity beats expectations in 4Q17

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Industrial production (IP) grew by 8.7% yoy (cal. adj.) in December 2017 above the market call of near 7%. Hence, the moderation in IP proved to be limited with 7.8% annual growth in 4Q after 10.2% growth in 3Q. We maintain our 2017 GDP growth estimate at 7% with risks on the upside while the economy may moderate towards near 4.5% in 2018.

Available in English

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Turkey | Inflation fell on base effects as expected

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Consumer prices increased by 1.02% (mom) in January, higher than our forecast (0.75%) but lower than the market call (1.3%). Annual consumer inflation fell to 10.35% from 11.92% thanks to favorable base effects mostly on food. We expect the headline to ease slightly below 10% by end 1Q but then show some volatility before falling to around 9% at the end of the year.

Available in English

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Turkey Economic Outlook. First quarter 2018

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The policy impulse and the resilience of the economy resulted in strong growth dynamics. Inflation will remain high during most of the year on inertia, robust domestic demand and lagged effects of exchange rate depreciation. The CBRT will maintain the tight stance, while fiscal policy will likely remain accommodative in 2018.

Available in English

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Turkey | The CBRT strengthens the stance

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The Central Bank (CBRT) maintained policy rates unchanged, including the late liquidity window (LLW) at 12.75%, in line with expectations. The Bank reinforced the tight sentiment by adding some “verbal tightening” as observed in our Big-Data sentiment of the statement.

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Turkey | IP implies strong growth in 4Q

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IP grew by 7.0% yoy in November (cal. adj.) in line with expectations. After growing 10% in 3Q, yearly IP growth rate in October-November moderated to 7.2%. Our monthly GDP indicator nowcasts 6.8% yoy in December, implying a whole year growth rate slightly above 7% in 2017.

Available in English

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Turkey | Another pick-up in core inflation

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Consumer prices increased by 0.69% (mom) in December 2017, higher than median market expectation and BBVA-GB forecast (both 0.5%). We expect the headline to ease towards slightly below 10% by the end of 1Q and stay close to these levels until 4Q before falling to around 9% at the end of the year.

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Geographies:Turkey

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Turkey: The CBRT tightens but lower than expected

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The CBRT hiked the recent de-facto policy rate (late liquidity window, LLW) by only 50bps to 12.75%, disappointing the market call between 75-100bps and our call of 125bps in the average funding rate. The incoming inflation data will be the key input to know whether the CBRT opted today for a gradualist approach or just a wait-and-see attitude.

Available in English

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Turkey: Domestic demand boosts GDP

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The GDP growth rate of 3Q17 surprised on the upside at 11.1% (8.5% both BBVA-GB and consensus), which was supported by the Government’s counter-cyclical measures, favorable base year impact and working day adjustments. This strong figure and an already promising 4Q17 nowcast will lead us to significantly upgrade our already high GDP forecast (6%) to near 7% for 2017.

Available in English