What matters on Monday, January 17

We will start the week with the December results of the central government budget. With this data, the picture for the economy in 2021 will become clear. The target for 2021 was that budget expenditures be TRY 1.35tr, revenues be TRY 1.1tr, and the budget not exceed a TRY 245bn deficit. As of the end of November, 98% of the expenditures were realized and the total revenue reached TRY 1.27tr. The reason for this is that the 11-month tax revenues exceeded the target by TRY 130bn and interest income by TRY 42bn. The Medium-Term Program, which was announced last fall, forecasted the 2021 central government budget deficit as TRY 230bn and its ratio to GDP as 3.5%.

The Central Bank will announce the November housing price index on Tuesday of this week. The construction cost index increased by 8% compared to October and by 48.9% compared to 2020, reaching 348.5 in November. We will see a similar increase in housing prices as well.   The increase in housing prices, which have doubled since the beginning of 2018, will continue. Climbing construction costs, rising inflation, continued growth in real housing demand, and supply shortages in some regions are pushing prices up.

The most anticipated news of the week is the interest rate decision, which will be announced on Thursday afternoon. The policy rate was reduced by 5 points, while inflation increased by 16 points after September. Emphasizing inflation and tight monetary policy in all the statements made before September, the Central Bank changed its attitude in recent months. There was no statement from any official saying, “We will fight inflation through tight monetary policy.” Therefore, there is currently no possibility of an interest rate increase in this month’s meeting. Participants in the latest market participants survey also do not expect a new discount on the interest rate. We can say that the probability of getting a discount, albeit very low, is higher than the probability of an increase.

January consumer confidence index will be announced on Friday morning. In the index, which was at a record low level of 71.1 in November, several factors paved the way for the January data to either lower or higher. The price hikes and the inflation index, which reached its highest point in 20 years, likely had a downward effect. On the other hand, wage increases and the decreasing tension in foreign exchange (FX) rates likely had a positive effect on the index. Whichever one of them outweighs the other will determine the movement of the index. However, consumer confidence may be more sensitive to the decrease in FX rates in this period. Therefore, we might see a slight increase in the index.


The short-term external debt stock rose by 8.6% to USD 124.1bn in November 2021, as compared to the end of 2020, according to the Central Bank.

The Ministry of Treasury and Finance will announce the central government’s budget balance figures for December (11.00 am).


>> On the cover: Jürgen Schulz, Germany’s Ambassador to Ankara, is on our cover this week. Schulz says Germany will continue to be a reliable partner for Turkey and attaches great importance to deepening the cooperation between the European Union (EU) and Turkey. You can read the details on pages 8-9.

>> Professor Ilter Turan: Turkey gets a new U.S. ambassador. P. 10.

>> Q&A: Prof. Bulent Gultekin, Former Central Bank Governor and Former President of the European Finance Association (EFA), now a Professor in the Finance Department at the Wharton School of the University of Pennsylvania. P. 11.

>> Our Chief Economist Gunduz Findikcioglu examines whether a society can willingly change itself in economic sense on pages 12-13.

>> Our Foreign Policy Columnist Zeynep Gurcanli looks into the developments that please Ankara in the Eastern Mediterranean. You can read the details on page 14.

Leave a Reply

Your email address will not be published.