TURKEY’S YEAR-END INFLATION EXPECTATIONS REACH 9.9% IN OCTOBER

Expectations for Turkey’s year-end inflation rate have risen from 9.72% in September to 9.89% in October, according to the Central Bank of Turkey’s regular survey of businesses and analysts, published on Oct. 16. The latest data showed that the country’s annual consumer price inflation accelerated from 10.68% in August to 11.2% in September.

The Turkish government expects inflation to fall from 9.5% this year to 7% next year and to 5% by 2020, according to the updated medium-term economic program (MTP) unveiled on Sept. 27. Ratings agency Fitch expects Turkey’s annual inflation rate to be 9.5% at yearend while its forecasts for 2018 and 2019 stand at 8% and 7.8%, respectively. The International Monetary Fund (IMF) predicts in its latest October World Economic Outlook report that Turkey’s CPI inflation will be 10.9% this year, up from the 10.1% anticipated in the April report, and

9.3% in 2018, up from the previous estimate of 9.1%. According to the central bank survey, consumer prices are expected to increase by 1.31% month-on-month in October and 0.60% month-on-month in November.

Respondents to the central bank survey also raised their GDP growth forecast for 2017 to 5.2% in October from 4.6% in November while increasing their forecast for

2018 to 4.3% from 4%. Turkey’s economy expanded at 5.1% year-on-year in the second quarter of 2017 after growing 5.2% in Q1. The Turkish government has set the annual GDP growth target at 5.5% per annum for 2018-20, according to the MTP. Turkey’s economy is forecast to grow by 5.1% this year, the IMF said in the latest edition of its World Economic Outlook (WEO) report, published on Oct. 10, revising up its GDP growth forecast from the 2.5% anticipated in April. The current account deficit (CAD) expectations for 2017 edged up to $38 billion in October from $36.9 billion in September. Across January-August, Turkey’s CAD rose by 19% year-on-year to $27.2 billion. The Turkish government forecast that the country’s CAD will stand at 4.6% of national income, or $39.2 billion, this year, but will decline to 4.3% of GDP in 2018 and further to 3.9% in 2020. Turkey posted a CAD of $32.6 billion for the entirety of 2016. Survey respondents also said they expected the USD-TRY rate to be 3.7165 at the end of this year, up from the previous survey’s 3.6323.