Turkey’s end-year inflation expectations reach 9.9% in October

Turkey’s end-year inflation expectations reach 9.9% in October
By bne IntelliNews October 16, 2017

Expectations for Turkey's end-2017 inflation rate have risen from 9.72% in September to 9.89% in October, according to the central bank’s regular survey of businesses and analysts, published on October 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 programme unveiled on September 27.

Fitch expects Turkey’s annual inflation rate to be 9.5% at end-2017 while its forecasts for 2018 and 2019 stand at 8% and 7.8%, respectively.

The 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% m/m in October and by 0.60% m/m in November.

Respondents in 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% y/y 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 2018-2020, according to its updated medium-term economic programme unveiled on September 27.

Turkey’s economy is forecast to grow by 5.1% this year, the International Monetary Fund (IMF) said in the latest edition of its World Economic Outlook (WEO) report, published on October 10, revising up its GDP growth forecast from the 2.5% anticipated in April.

The current account deficit expectations for 2017 edged up to $38bn in October from $36.9bn in September.

Across January-August, Turkey’s current account deficit rose by 19% y/y to $27.2bn.

The Turkish government forecast that the country’s current account deficit will stand at 4.6% of national income or $39.2bn this year, but will decline to 4.3% of GDP in 2018 and further to 3.9% in 2020.

Turkey posted a current account deficit of $32.6bn for the entirety of 2016.

Survey respondents also said that they expected the USD-TRY rate to be 3.7165 at the end of this year, up from the previous survey’s 3.6323.

The Turkish lira lost 0.14% d/d against USD to trade at TRY3.6402 as of 15:45 local time on October 16 while the benchmark BIST-100 index was up 0.30% to 106,547.