The Gross Domestic Product (GDP) growth for 2021 is forecasted at 9% in the 2022-2024 Medium-Term Economic Program (OVP). Considering the Industrial Production Index in September, GDP growth may exceed 9% for 2021. The Industrial Production Index rose by nearly 9% in September, though the surge slowed. The increase in Q3 was 9% in the...
Author: Alaattin Aktas (Alaattin Aktas)
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What will happen to CPI?
The difference between the Consumer Price Index (CPI) and the Domestic Producer Price Index (D-PPI), which in parallel until 2017, significantly increased during the Pastor Brunson crisis in 2018. As a result of the crisis, D-PPI exceeded 7.4% CPI, then declined to 3% in 2019. The difference between CPI and D-PPI exceeded 10% for the...
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Do exports surge when FX rates rise?
“Exports surge when foreign exchange (FX) rates jump. FX rates should be raised to decrease imports. FX rates should be raised to decrease the foreign trade deficit. Thus, the current account deficit will decline…” I’m mentioning these opinions, but they don’t look at how the FX rate-foreign trade relationship works. Exports and imports had almost...
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INTEREST RATE CUT: WAS IT EARLY OR LATE?
What could have led the Central Bank (CB) to reduce the interest rate in September? The interest rate, which was increased at the meeting held in March, had been kept steady at 19% for six months until September. President Erdogan’s opinion about interest rates isn’t new. Tongues were bitten after Naci Agbal was appointed the...
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FX RATE INCREASE RAISES INFLATION
There are basically two reasons why prices rise: when supply can’t meet demand, meaning demand inflation, and rapid cost increase, or cost inflation. The biggest pressure on production costs is foreign exchange (FX) rates in Turkey. An FX rate increase is the main reason for inflation. USD peaked in September 2018 during the Pastor Crisis...
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TurkStat ran away but got hit with its own data
The previous year’s death statistics are usually announced in June. This year, the death statistics of 2020 were awaited with even more anticipation. The general opinion was that the COVID-19 deaths would reflect on the statistics and that it would be possible to see the Ministry of Health data, which was sometimes doubted. This would...
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August CPI may have a bad surprise in store
From 2003 to 2020, a total of 18 years. During this period, the consumer price index (CPI) increased above 1% once in August 2018. That increase was 2.30%. The reason for it is quite simple, the infamous priest crisis. The dollar gaining 21% against the lira in August and allowing the exchange rate to skyrocket...
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To whom is Erdogan’s message?
President Recep Tayyip Erdogan’s stance on interest rates is clear. Erdogan is always against high-interest rates. He claims that a high-interest rate is an important cost element and that inflation always rises because of it. President Erdogan reiterated his stance on interest rates and prices in a TV program last week and this time he...
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Q2 growth may reach 25%
The Turkish economy will perform a little better in the second quarter of the year. The gross domestic product (GDP), which contracted by 10.3% to USD 385bn in the same period of last year from USD 429bn in 2019, seems like it will increase by around 25% to USD 480bn in the second quarter of...
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A future lecture at economics faculties
Let’s start with a quite simple question: What would you consider if you wanted to make a portfolio investment in another country as an investor? The answers are obvious, aren’t they? First, you would examine whether the return of the security to be invested in is good. As you attempt to invest in foreign countries...