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GDP figures may deviate from OVP estimations

GDP figures may deviate from OVP estimations

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...

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Export and import unit value indices up yoy in September

Export and import unit value indices up yoy in September

The overall export unit value index increased by 11.8% and the overall import unit value index rose by 23.4% in September, compared to the same month last year, according to the Turkish Statistical Institute. The overall export unit value index for food, beverages and tobacco increased by 7.6%, for crude materials (excluding fuels) by 24.6%,...

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What will happen to CPI?

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?

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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Consumer confidence hits 152-month low

Consumer confidence hits 152-month low

BY DR. H. BADER ARSLAN The consumer confidence index fell to 76.8, a 152-month low in October, according to the Turkish Statistical Institute. The index declined to such levels last time in the 2008-2009 period, during the Global Financial Crisis. Consumer confidence is a misperceived datum in Turkey. If it rises from 76 to 79,...

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RECORD FX RATES AND THE COMING PPK MEETING

RECORD FX RATES AND THE COMING PPK MEETING

BY UFUK KORCAN USD/TRY exceeded 9.20 with three dismissals and appointments at the Central Bank (CB) and increasing interest rate cut expectations. The upward trend in the USD/TRY started on the day CBRT Governor Naci Agbal was replaced by Sahap Kavcioglu. Starting from 7.20, it rose steadily for all but one month. The CBRT’s 100...

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THE WAY IS OPEN FOR REDUCTION OF ONE MORE POINT IN POLICY RATE

THE WAY IS OPEN FOR REDUCTION OF ONE MORE POINT IN POLICY RATE

BY SEBNEM TURHAN In September, consumer inflation rose by 1.25% on a monthly basis, in line with expectations, and annual inflation rose to 19.58%. Annual inflation in August was 19.25%. The development of C core inflation became the indicator that the market paid more attention to, after the Central Bank made a surprise interest rate...

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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

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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FOREIGNERS PREFER DISTRESSED DOMESTIC COMPANIES

FOREIGNERS PREFER DISTRESSED DOMESTIC COMPANIES

BY MEHMET KAYA A joint study by Dumlupinar University and Dokuz Eylul University on foreign direct investment (FDI) and its relationship to financial stability in Turkey, Brazil, Argentina, South Africa, Mexico, India and Indonesia for the 2008-2019 period revealed that an increase in non-performing loans (NPLs), normally an adverse indicator for financial stability, raises FDI....