End-year inflation expectations rose to 8.33% in May from 8.12% a month ago, the Central Bank’s regular survey showed on Friday.

Participants of the Bank’s Expectations Survey revised their 12-month ahead inflation forecast to 7.21% from a previous 7.22%. Consumer prices are expected to show an increase of 0.63% m/m in May versus the expectation of 0.59% m/m rise in the previous survey. Participants’ inflation expectations for June stand at 0.25% m/m. Consumer prices rose 1.34% m/m in April (market consensus: 0.88% m/m.), according to the latest official data. Annual inflation, consequently, accelerated to 9.38% in April from 8.39% in the previous month, the highest rate since April 2012. The Central Bank that has raised its 2014 inflation forecast to 7.6% from a previous 6.6% expects inflation to peak in May. The Bank’s official inflation target for 2014 is 5%. The Central Bank has vowed to keep monetary policy tight until there is a significant improvement in the inflation outlook.

GDP growth expectations for 2014 were also revised to 2.8% from a previous 2.7% but forecasts for 2013 remained unchanged at 3.7%, the Survey showed. The government expects the Turkish economy to grow 4% this year. But, major international institutions have slashed their projections for 2014. In April, the IMF cut its growth forecast to 2.3% from a previous 3.5%. The OECD lowered its estimate to 2.8% from a previous 3.8% and earlier this week, The EBRD slashed its 2014 GDP growth forecast for Turkey to 2.5% from a previous 3.3%.

As a final note, Turkey’s current account deficit is expected to be USD 50.3bn at the end of the year, lower than the previous survey’s USD 50.7bn. The current account deficit shrank 43.4% y/y to USD 3.19bn in March (market consensus: USD 3.2bn). In the first three months of the year, the current account deficit fell by 30.8% y/y to USD 11.46bn.