The Central Bank (CB), which unexpectedly cut the policy rate by 1 point to 13% last week, announced that new macroprudential measures will be applied to commercial loans to address loan growth and interest rates. The move aims to support financial stability and strengthen the monetary transmission mechanism. Lenders will have to maintain treasury bonds depending on the coefficient of the interest rates in the commercial loans they will give. “The reserve requirement maintenance being applied at a ratio of 20% will be replaced by the maintenance of securities at 30% for banks to enhance the efficiency of the practice,” the statement read. “For commercial loans, 20% of the loan amount to be extended at an annual compound interest rate 1.4 times higher than the CB -released annual compound reference rate,” the CB said. If the loan interest rate is 1.8 times or more than the reference rate, the facility rate will be applied as 90%.
On the foreign policy side, UN Secretary-General Antonio Guterres thanked Turkey for its role in the signing of the recent grain export deal, officially known as the Black Sea Grain Initiative, in a joint press conference with Defense Minister Hulusi Akar at the Joint Coordination Centre (JCC). “The other part of this package deal is unimpeded access to the global markets of Russian food and fertilizer, which are not subject to sanctions,” Guterres said, adding that getting more food and fertilizer out of Ukraine and Russia is crucial to further calm commodity markets and lower prices for consumers. Defense Minister Hulusi Akar said 656,349 tons of Ukrainian grain and agricultural products have left Ukrainian ports since August 1. According to him, as many as 51 ships have sailed, 27 of which have departed from Ukraine, with more on their way.
Regarding the economic agenda of the week, the Turkish Statistical Institute (TurkStat) will release consumer and sectoral confidence indices on Tuesday and Thursday, respectively. Although they do not affect the market, confidence indices are important in terms of shedding light on the short-term course of the economy. The most critical among them will be the real sector confidence index. The real sector confidence index is produced every month based on the Central Bank’s surveys of industrial organizations. The index is a meaningful leading indicator as it moves closely with the industrial production index. The index regressed in three of the last five months and remained unchanged in two. However, it has turned downwards in the last two months. The loss of confidence in industrial sectors indicates that production will also decrease. Leading indicators show that the decline will continue in the data to be released this week.
Moreover, the biweekly cabinet meeting, which was not held last week due to the AK Party’s 21st-anniversary program, is expected to convene under the chairmanship of President Recep Tayyip Erdogan today. A busy agenda awaits the cabinet, especially given the economy, the new relationship with Syria, the Russia-Ukraine war, and the fight against terrorism.
Palestinian President Mahmoud Abbas is set to arrive in Turkey today for a three-day official visit, according to the Palestinian news agency Wafa. Abbas will meet with President Recep Tayyip Erdogan for talks on bilateral relations. The discussions between the two leaders will also take up Palestinian developments and regional and international issues of mutual concern.
President Erdogan is expected to go to Ahlat on Thursday for the anniversary of the Manzikert Victory.
The Republican People’s Party (CHP) Chairman Kemal Kilicdaroglu will go to Nigde on Tuesday as part of the group meetings held in a different city every week. Kilicdaroglu will visit the city center and some districts in Nigde and meet with citizens following the meeting. He will also visit Afyonkarahisar on Thursday.
DAILY AGENDA
The automotive production totaled 93,659 units in July, according to the Automotive Manufacturers Association (OSD).
The non-domestic producer price index (ND-PPI) jumped 111.34% in July, year-over-year, according to TurkStat. The ND-PPI rose by 0.66% on a monthly basis.
The Agricultural Input Price Index (Agriculture-IPI) soared 134.96% in June, compared to the same month last year, according to TurkStat. Agriculture-IPI surged by 7.92% in June, month-over-month.
IN OUR MAGAZINE THIS WEEK:
>> On the cover: Gurok Group, which has been among Turkey’s major conglomerates for 74 years in glassware, glass packaging, construction, tile, and tourism, is picking up the pace in tourism investments. The group, which made two hotel investments in the Maldives in 2018 and 2021 totaling USD 300m as first global steps for tourism, is looking at new destinations for expansion in this area, according to Esin Gural Argat, Vice President of Gurok Group. You can read the details on pages 8-9.
>> Professor Ilter Turan: Economic giant, strategic dwarf. P. 10.
>> Q&A: Isin Celebi, Former Minister of State Responsible for the Economy. P. 11.
>> Chief Economist Gunduz Findikcioglu: Cycles and stagnations. You can read the details on pages 12-13.
>> Zeynep Gurcanli: Things are messed up. P. 14.
