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Turkey
Alvaro Ortiz
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: 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.

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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

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Turkey: Inflation path deteriorates further

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Annual consumer inflation hit 13% mostly due to the sizable pick-up in food inflation and also the jump in both energy and core prices in November. Recent events and rigidity in core prices signal that the range of the CBRT’s expected medium term disinflation path may not to be materialized, thus, monetary policy should be adjusted accordingly.

Available in English

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Turkey: The Central Bank of Turkey designs a mechanism to mitigate FX volatility

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The CBRT announced yesterday they will start to auction foreign exchange (FX) hedging instruments to enhance tools to manage corporates’ currency risk. We elaborate the main goal of the new tool as to reduce the Turkish lira volatility by both enhancing liquidity and increasing financial depth in the currency market.

Available in English

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Turkey: IP Confirms Robust Activity in 3Q

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Industrial production growth was up to 10%, from 2Q’s 4.6%. Adding up to the previous year’s contraction our monthly GDP indicator (GBTRGDPY Index at Bloomberg) nowcasts 7.9% yoy (94% info) growth for 3Q. Our models suggest strong growth pattern in for the beginning of 4Q as well, in line with our 6% 2017 GDP growth forecast but with risks that could be on the upside.

Units:
Geographies:Turkey

Available in English

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The CBRT displays a more hawkish tone

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The CBRT keeps its interest rate corridor parallel to market consensus. The hawkish tone is preserved as the Bank continues to find both headline and core inflation outlook alarming over pricing behavior and tries to clarify its roadmap over the maintenance of the tight stance. We expect the CBRT to wait for some more room for monetary easing.

Units:
Geographies:Turkey

Available in English

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Turkey Economic Outlook. Fourth quarter 2017

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Global recovery proceeds at a stable pace. Moreover, thanks to the Credit Guarantee Fund, Turkish economy continues to grow above potential, which leads us to upgrade our 2017 GDP growth estimate by 1pp to 6%. Additionally, higher momentum in economic activity and ongoing exchange rate pass-through especially from euro results in a higher inflation path.

Units:
Geographies:Turkey

Available in English

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The Central Bank of Turkey remains tight

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The Central Bank maintained its interest rate corridor once again parallel to our call and market consensus. The Bank keeps its hawkish tone as it also finds the high levels of both the headline and core inflation alarming over pricing behavior. We expect the Bank not to find room for monetary easing until the end of 1Q18, when the headline will fall towards 8-8.5%.

Units:
Geographies:Turkey

Available in English

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Turkey: Robust 2Q GDP growth, as expected

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2Q17 GDP growth came in at 5.1% yoy, just in line with our expectation. Investment and private consumption were the main contributors whilst government spending contribution was negative for the first time in 9 quarters. We expect even a higher growth performance in 2H so risks on our 2017 forecast are on the upside.

Units:
Geographies:Turkey

Available in English

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Turkey: Activity accelerates further

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Industrial production in July grew by 14.5% yoy (cal.adj.). Our monthly GDP indicator (GBTRGDPY index at Bloomberg) nowcasts 5.1% GDP growth for 2Q and hints even higher performance for 3Q. Considering also an acceleration in 3Q with both base impact and enhanced activity, we believe that the risks on our 5% GDP growth expectation for 2017 are clearly on the upside.

Units:
Geographies:Turkey

Available in English

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Monthly Economic Monitor Turkey

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Our monthly GDP indicator signals 6% growth in July with available preliminary indicators (32% info) and acceleration will gain pace resulting in at least 7% growth in 3Q even if GDP would not grow at all on quarterly basis. High trend in inflation (around 11% until December) will force the CBRT to stay tight a little longer despite the recent retreatment in USD/TL.

Available in English

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Inflation: Outlook worsens on core dynamics

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In August, consumer prices rose by 0.52%, higher than the consensus (0.1%) and even our estimate (0.3%). FX pass-through mostly on the recent appreciation of Euro, second round price effects and spill-overs from the narrowing output gap continued to be the factors behind. We expect the headline to stay close to 11% before it would fall to 9-9.5% at the end of the year.

Available in English

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Turkey: Strong … and accelerating activity

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Annual growth in industrial production (IP) was 3.4% yoy in June (cal. adj.) confirming our robust economic activity forecast for overall 2Q, as IP growth in 2Q reached up to 4.5% yoy from 1Q’s 2.1% reading. Our monthly GDP indicator (GBTRGDPY index at Bloomberg) nowcasts 5.1% YoY GDP growth in 2Q. We think that risks are on the upside for our 5% growth estimate for 2017.

Units:
Geographies:Turkey

Available in English

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Inflation: Core inflation implies risks on the upside

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Consumer prices rose by 0.15% in July, incrementally lower than the market consensus and our call (0.2%). Annual headline fell to 9.8% thanks to food and favorable base impact on tobacco. Looking ahead, we expect the headline inflation to breach 10% in August and stay at 10-11% levels till December before it would sizably fall towards 9% at the end of the year.

Available in English

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Turkey | Monthly Economic Monitor - July 2017

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Robust stance in the economic activity continued in 2Q, according to our nowcast. Inflation will ease further in summer on top of favorable base effects before climbing up again in 3Q. The CBRT strengthened its hawkish stance by keeping its interest rates intact and having the average funding rate hover above 11.9%.

Units:
Geographies:Turkey

Available in English