What matters on Friday, December 10

The Minimum Wage Determination Commission held its third meeting yesterday, hosted by the Turkish Confederation of Employers’ Association (TISK). The ambiance of optimism and reconciliation that has imbued the first few meetings ended this time. The employee representatives reacted to TISK offering the minimum wage at TRY 3,100. Disagreement put a crimp on expectations that the minimum wage would be determined this week. “TISK anticipates the minimum wage to be TRY 3,100, while the Confederation of Turkish Trade Unions (TURK-IS) estimates it should be TRY 3,579,” said Nurcan Onder, General Manager of Labor at the Ministry of Labor and Social Security. The minimum wage is calculated by the Minimum Wage Determination Commission for light labor at TRY 2,979 and heavy labor at TRY 3,567. The date for the decision meeting hasn’t been set.

In the meantime, new Treasury and Finance Minister Nureddin Nebati brought up during 2022 budget talks in Parliament that the wages of civil servants and workers will be raised. “We plan to increase the minimum wage for 2022 to a level that will meet everyone’s expectations,” Nebati said.

The U.S.-based international credit rating agency Moody’s estimates Turkey’s real gross domestic product (GDP) will grow by 4% in 2022, according to BloombergHT. Moody’s stated that the ongoing high inflation in Turkey will significantly decelerate the country’s growth and that weakness in TRY will raise dollarization. “We estimate the consumer price index (CPI), which hit 21.3% in November, to rise to around 25% or even higher in the coming months. CPI is forecasted to hover around 17-18% at the end of the next year,” Moody’s noted.

The potential that interest rates will be lowered further by the Central Bank (CB), or that unusual measures will be taken by the CB, pose risks for macroeconomic stability, according to the international credit rating agency Fitch Ratings. As it the agency says, continued interest rate cuts decrease the credibility of the monetary policy and puts pressure on TRY. While Turkey has experienced various foreign exchange (FX) rate shocks in recent years, another shock may emerge soon.

The international investment bank Barclays estimates that the CB to lower the interest rate by 300 basis points at the next two meetings and that USD/TRY will reach 14.50 at the end of 2021. Turkey is more prepared against FX rate shocks as compared to 2018, but no metrics have shown an improvement since then, according to the institution.


The unemployment rate dropped by 0.2 points to 11.2% in October, compared to the previous month, according to the Turkish Statistical Institute (TurkStat).

The Construction Cost Index (CCI) surged by 41.93% in October, compared to the same month last year, according to TurkStat. The CCI also rose by 4.75% on a monthly basis.

The overall export unit value index increased by 12.0% while the overall import unit value index rose by 39.0% in October, compared to the same month last year, according to TurkStat. The overall export volume index surged by 7.3% and the overall import volume index decreased by 18.8% in the same period.

The year-end inflation expectation rose from 19.31% to 23.85% in December, compared to November, according to the Central Bank’s Market Participants Survey.

Parliament will discuss the 2022 budget of the Ministries of Agriculture and Forestry, Justice, and Defense today.

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