What matters on Monday, December 20

The Central Bank (CB), which lowered the policy rate by 100 basis points to 14% last week, intervened in foreign exchange (FX) markets for the fifth time on Friday, after USD/TRY hit 17.14 with the adverse impact of the bank’s rate cut. However, USD/TRY reaches 17.41 this morning. The policy rate stood at 15% while USD/TRY was 7.63 in December 2020. The inflation, meanwhile, rose from 14.03% to 21.31% in December, on an annual basis.

In the meantime, ‘the shoe is on the other foot’ on the stock exchange. Starting the day at 2,323.16 points, Borsa Istanbul’s BIST 100 index sharply dropped by 8.52% on Friday, from Thursday’s closing of 2,278.55 points. 

Although the policy rate is at nearly the same level as it was last year, there is a serious deterioration in the FX rate and inflation. 

The policy rate was increased to 19% at the beginning of this year. As a result, many short-term indicators began to improve and confidence in the economy strengthened. 

With subsequent changes, zigzagging explanations, faulty steps, and a broken communication strategy, the economy ended up with deterioration. However, with the right steps, we could see a much better economic picture even with an interest rate lowered to 14%.

One of the most important data for the week will be the tourism statistics for November, which will be announced Friday morning. As TRY depreciates, the attractiveness of the Turkish market for tourists increases. This has resulted in an increase in the number of visitors coming from border countries for shopping purposes. This is seen from time to time in the media. Adding a price advantage to the post-pandemic normalization of travel will enable us to see positive data in terms of the number of visitors in the near future. This is one of the rare benefits of the jump in FX rates. 

Monetary tightening has begun around the world. The coming period will be difficult for Turkey not only because of internal deterioration but also because of external money tightening.


The non-domestic producer price index (ND-PPI) rose by 47.89% in November, compared to the same month of the previous year, according to the Turkish Statistical Institute (TurkStat). ND-PPI surged by 13.49% on a monthly basis.

The net international investment position (IIP) posted USD 255.7bn deficit in October, according to the Central Bank. The net IIP deficit decreased from USD 384.7bn to USD 255.7bn in October on an annual basis.

The Cabinet will convene under the presidency of President Recep Tayyip Erdogan. The current economic situation and additional increase in civil servants’ wages and pensions will be the main agenda items of the meeting. The Cabinet will also discuss the Omicron variant the latest situation in the fight against the pandemic. 

The Parliament will discuss the legislative proposal on Income Tax Law and amendment of some laws.


>> On the cover: Alpplas, which has been producing plastic parts for appliances for more than 30 years, has inked a deal with one of the major car manufacturers in the world to produce a mold for a 2026 model car. The company, which produces 50 million white goods parts annually, has also become a supplier for the car industry in the last 10 years. “There is no home Alpplas has not entered in Turkey,” says Tufan Oney, Vice President and General Manager of Alpplas. You can read the details on pages 14 and 15.

>> Professor Ilter Turan: A hopeful sign in Turkey-Armenia relations. P. 10.

>> In our Q&A section on pages 12 and 13, you can read the details of the tectonic change in economic approach from one of the designers of the new policy. Sefik Caliskan, a corporation doctor, as he calls himself, explains the new economic policy to daily DUNYA correspondent Mehmet Kaya in a long interview. We would recommend you read the interview to better understand the new Turkey the government is trying to shape.

>> Startup: Digitalization’s main problem: HR P.16.

>> “For exports, it’s a kilogram. For tourism, it’s foreign tourists,” says our tourism columnist Fehmi Kofteoglu. You can read the details on page 18. 

>> Zeynep Gurcanli: The Regression of Foreign Policy. P 19.

>> Minister of Energy and Natural Resources Fatih Donmez said their goal is nuclear-supported green development. You can read the details in our Energy section on page 22. 

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