MPC minutes critical, not interest rate

THE REPORT IMF’S WORLD ECONOMIC OUTLOOK was one of the most important agendas for last week in the economy. The world economy is expected to grow by 6% in 2021 after a 3.3% contraction in 2020. The IMF also thinks Turkey will record the same amount of growth this year. The rate of current account deficit on the GDP is expected to become 3.4% and the unemployment is expected to decrease to 12.4%.

This year, no one should expect any issues in terms of growth. We have an incredible outlook on industrial production and exports, as well as significant base effects from last year. The record-high in COVID -19 case numbers and the restrictions in Ramadan will hurt the revenues of the services sector. Despite the restrictions, if the number of cases doesn’t dramatically decline, this will cause a weakening in the optimism for tourism in the summer. Either way, there is not a serious risk for now for growth to decrease significantly below 6%.

In addition to important indicators to be announced this week, markets are waiting for the interest rate decision to be announced by the Monetary Policy Committee (MPC) on Thursday. Since the new Central Bank Governor, Sahap Kavcioglu’s statement after his appointment signaled that there will be no change in the interest rate, the markets are not worried. However, the details of the minutes may give us some clues about the MPC’s next step.

•n Monday, February balance of payments and labor force data and on Tuesday, February industrial production and turnover indices data will be announced. There’s a small possibility of a surprise in these data. March house sales, which will be announced on Thursday morning, are expected to to be weak, parallel to previous months.