TR Economy & Updates

TheInsider

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While the spot rate of the lira has continued to weaken against the dollar since the interest rate rise to 40%, I have noticed that the 2 year forward rate (was 54+ to the $ a few weeks ago) is now 50+ to the $. Would another interest rate hike be necessary or is it being raised to reduce the inflation rate?
It is to combat inflation and show the market that CB won't give an inch at all costs. IMHO %45 is the sweet spot. I don't think CB will stop the interest rate increase before seeing any meaningful improvement in the 1-year forward rate.
 

YeşilVatan

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DEVA clowns are wrong in every single instance. Even when they are not connected to the topic or even if the debate itself doesn't exist.

They're wrong. They don't have a right to anything in my eyes. Lowest of the low. They need to be ostracized from the society with great fervor.
 

Heartbang

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DEVA clowns are wrong in every single instance. Even when they are not connected to the topic or even if the debate itself doesn't exist.

They're wrong. They don't have a right to anything in my eyes. Lowest of the low. They need to be ostracized from the society with great fervor.
If Babacan came into power he'd make us "eat ze bugs." He's a notorious Schwabite.
 

Strong AI

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62 percent inflation, 40 percent interest rates and a weak lira: That's why the Turkish economy is still booming​


  • Turkey currently plays a special role in the global economy: inflation is 62 percent and the key interest rate is 40 percent. The lira is one of the weakest currencies in the world. But at the same time the economy is growing strongly.
  • According to the OECD, Turkey will be one of the industrialized countries with the greatest economic growth in 2023, with a plus of 4.5 percent. The rating agency S&P just raised its outlook for Turkey's creditworthiness.
  • President Recep Tayyip Erdogan's 180-degree turnaround appears to be taking effect.

Türkiye's economy is like dancing on a volcano. People are groaning under 62 percent inflation. The lira is one of the weakest currencies in the world. In the fight against decline, the central bank raised the key interest rate to 40 percent. It wouldn't be surprising if the economy were in ruins. But on the contrary: the OECD has just raised the forecast for Turkey for 2023 to 4.5 percent. The country on the Bosphorus is currently one of the fastest growing countries in the world.

Turkey remains a phenomenon. For a long time, President Recep Tayyip Erdogan caused people to shake heads with his economic policy. When prices rose sharply in Turkey, he demanded that interest rates be reduced. He replaced those in the central bank and the finance ministry who did not want to follow his “Erdoganomics” with willing followers. As a result, inflation rose to an incredible 85 percent in 2022. The local currency, the lira, fell into decline. Only the Argentine peso recorded larger losses.

After his narrow victory in the presidential election in February, Erdogan surprised again, this time with a 180-degree turnaround. He brought back former Finance Minister Mehmet Simsek. Erdogan had previously temporarily replaced the economist with his son-in-law. At Simsek's suggestion, he made Wall Street-trained banker Hafize Gaye Erkan governor of the central bank - and vowed a return to economic reason.

The new guys got to work. Finance Minister Simsek increased numerous taxes in order to limit the budget deficit and cover the costs of the devastating earthquake at the beginning of the year. Erkan vowed the central bank to fight inflation and increased interest rates quickly, most recently on November 23, to 40 percent. Inflation initially continued to rise.

Türkiye: High inflation, weak currency​

On the one hand, the soft lira makes imports expensive for Turkey. This hits Turkey hard because it has to import over 95 percent of its energy and a lot of food. On the other hand, the state fueled prices with tax increases. Thirdly, the statutory minimum wage was increased by 100 percent within one year.

After inflation temporarily fell, it has picked up again since the summer. Now a climax seems to have been reached. In November, inflation rose again, but “only” from 61.4 to 62 percent. That was less strong than expected.

The rise in inflation has slowed. In a month-on-month comparison, prices only rose by 3.3 percent in November. In July and August the price increase compared to the previous month was almost ten percent.

The central bank has so far had less success with the lira. Despite all interest rate increases, the currency fell to a historic low of almost 29 lira to one dollar at the end of November. At the beginning of December the price was only slightly better at 28.90. Since the beginning of the year, the lira has lost almost a third of its value against the euro and the US dollar.

In view of the economic data, it was surprising when the industrialized countries organization OECD raised the growth forecast for Turkey again to 4.5 percent in its November outlook. In the G20 of the largest industrialized and emerging countries, only India, China and Indonesia are growing faster this year. Turkey is not only doing far better than recession-hit Germany, but also than any other European G20 country.

The OECD also expects Turkey to achieve growth rates of 2.9 percent and 3.2 percent in the next two years, despite horribly high interest rates. This is also more than in the OECD as a whole or the G20. And Turkey would definitely grow more strongly than Germany.

Erdogan's turnaround is also being noticed on the capital markets. Ratings agency S&P raised its outlook for Turkey's creditworthiness on Friday. She now assesses the country's prospects as “positive” instead of “neutral”. S&P left the rating at “B”. However, the positive outlook brings Turkey closer to an upgrade of its credit rating.

Three reasons for the Turkish economic miracle​

There are three main factors that keep the Turkish economy going or even give it new momentum.

The population is growing. Population growth is also decreasing in Turkey, but it is still 0.7 percent per year. Türkiye's economic performance is lagging behind per capita. The comparatively young population represents growth opportunities and a need to catch up in consumption. Companies like the Chinese online retailer Alibaba, which wants to invest billions in Turkey, also see this .

Turkey benefits from Russia's war against Ukraine. Erdogan has also criticized the war. However, Turkey is the only NATO member not to join the sanctions against Russia. On the contrary: Turkey has stepped into the breach as a customer and supplier to Russia. Trade between both countries is increasing. In the first eight months of 2023, Turkish exports to Russia grew by 63 percent. Russia thus replaced Germany as Turkey's largest trading partner.

Turkey has become a hub in trade with Russia. The EU warned Turkey at the end of 2022 not to support Russia in circumventing sanctions.

One of the sectors that is growing rapidly in Turkey is the defense industry. According to the peace research institute Sipri, the Baykar company increased its sales by 94 percent to 1.4 billion euros in 2022. Baykar climbed from 100th to 74th place among the largest defense companies in the world.

The ambivalent effect of the earthquake . The devastating earthquake at the beginning of the year in the border area with Syria initially set back economic performance in the region. Tens of thousands of people died, over a million people lost their homes, factories were destroyed or had to limit their production. But for months now, reconstruction has been causing a construction boom from which significant parts of the Turkish economy are benefiting.

 

Lool

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Turkish unemployment levels is at its lowest level since 2012 and recorded at 8.5% of October


Turkey records its third current account surplus this year as well as its second consecutive current account surplus for the months September and October! As a result, Turkey's yearly current account deficit dropped by 9+ billion dollars by October



Simsek is saving Turkey while fulfilling Erdogan's desire of unhindered productivity and employment by ensuring that no severe recession takes place. Normally, these 2 aspects dont mix as with recession productivity goes down, and unemployment soars

Simsek is doing miracles rn
 
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TheInsider

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Turkish unemployment levels is at its lowest level since 2012 and recorded at 8.5% of October


Turkey records its third current account surplus this year as well as its second consecutive current account surplus for the months September and October! As a result, Turkey's yearly current account deficit dropped by 9+ billion dollars in October alone



Simsek is saving Turkey while ensuring that no severe recession takes place
Well, I told you. The new admin is doing good but the average Joe will feel some difficulties after local elections. Simsek is gearing up to cut the money supply after local elections. Expect inflation to come down as a result of cutting the money supply. There will be a price to be paid by the average citizen. I expect the interest rate increase to stop at somewhere around %45-50 depending on inflation data.
 

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Turkish unemployment levels is at its lowest level since 2012 and recorded at 8.5% of October


Turkey records its third current account surplus this year as well as its second consecutive current account surplus for the months September and October! As a result, Turkey's yearly current account deficit dropped by 9+ billion dollars in October alone



Simsek is saving Turkey while fulfilling Erdogan's desire of unhindered productivity and employment by ensuring that no severe recession takes place. Normally, these 2 aspects dont mix as with recession productivity goes down, and unemployment soars

Simsek is doing miracles rn
Because the covid time was an abnormal period.

It was maybe a good tactic that appoint Simsek not during but after the covid time.
 

Zafer

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We won't be belly-dancing for foreign investment down the road. Not all efforts can be made to get economy in good shape. Some efforts need to be made to fix geopolitical situation too. So at some point we can still see downturns, until we reduce our energy bills.
 

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"I didn't expect Japan to turn into a Turkish lira when I made a forecast for the Nikkei Stock Average of 300,000," said Emin Yurumazu, an economist for Tokyo's Million Eyes who hails from Turkey, alarmed by the situation. "That wouldn't make me happy."

Yurumazu was likening the yen to Turkey's national currency in a satirical way. In Turkey, policy rates were maintained below the inflation rate -- leading to net negative interest rates -- amid prolonged double deficits in the fiscal balance and the current account balance, which led to a negative spiral of higher prices and a weaker national currency.

Over a period from March 2020, when the COVID-19 pandemic broke out, to October 2023, the yen's real effective exchange rate dropped 29%, compared to a 21% drop for the Turkish lira. The real effective exchange rate is an index indicating a currency's relative purchasing power, calculated with price and trade changes taken into consideration.

The Turkish lira plunged more than 70% in nominal terms over the same period, but this was attributable to the country's annual inflation rate of more than 60%. Excluding this impact, the fall was smaller than that of the yen.

This situation "highlights weakening of the yen in substance," said Toru Sasaki, chief strategist at the Fukuoka Financial Group. Japan is the world's largest creditor, but its gross government debt is far larger than Turkey's.

According to Bank of Japan statistics, the net outflow of funds to overseas through securities investment trusts -- the difference between the amount invested and the amount collected -- totaled 105 trillion yen from January 2000 to June 2023. The statistics show a trend for funds to flow out during cycles of a weaker yen, observed from 2005 to 2007, 2013 to 2015 and from 2020 to now. A new program exempting taxes on small investments, called NISA, that will be introduced in January has the potential to make this stream of individual money into a river. This is the second year-2024 problem for the yen.

 

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Türkiye eyes to conclude the year with single-digit unemployment and a growth rate of 4.4%, Vice President Cevdet Yılmaz said on Friday, hailing the positive streak in the gross domestic product (GDP) figures despite the early February earthquakes
 

B_A

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Nothing to happy but at least this year Our GDP (nominal) per capita will be better than China.

But we are lower than Bulgaria.
 

UkroTurk

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Not too bad but need to have more brain and capital
IMG_20231218_164355_466.jpg
 

Strong AI

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The Central Bank Monetary Policy Committee, which held its last meeting of the year,
increased the policy rate by 250 basis points to 42.5 percent.
 

what

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The Central Bank Monetary Policy Committee, which held its last meeting of the year,
increased the policy rate by 250 basis points to 42.5 percent.

Slow down in the pace is good, if not politically motivated, its a good sign that the highest level of inflation is almost past us.


Is this an increasing or decreasing trend ?

40% of the youth want to live/study abroad

If you compare that with the Turkish refugee application numbers in Germany, there's no slow down of arrivals.
 

Strong AI

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If you compare that with the Turkish refugee application numbers in Germany
From ZEIT ONLINE:
"Hüseyin Imrak ist nur einer von Zehntausenden, die 2023 aus der Türkei nach Deutschland kamen, aber es gibt ein Merkmal, das seinen Fall repräsentativ macht: Imrak ist Kurde, so wie die meisten türkischen Staatsangehörigen, die in Deutschland Asyl beantragen. 84 Prozent gaben laut Bamf an, kurdischer Herkunft zu sein. Obwohl diese Gruppe in der Türkei, je nach Schätzungen, nur etwa ein Fünftel der Bevölkerung ausmacht."

"Hüseyin Imrak is just one of tens of thousands who came to Germany from Turkey in 2023, but there is one feature that makes his case representative: Imrak is Kurdish, like most Turkish nationals applying for asylum in Germany. According to Bamf, 84 percent said they were of Kurdish origin. Although in Turkey, according to estimates, this group only makes up about a fifth of the population."
 
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