Turkey’s official consumer price index (CPI) inflation ended 2022 at 64% y/y, the Turkish Statistical Institute (TUIK, or TurkStat) said on December 3 (chart).

The official rate peaked in October at 86%, the highest headline rate recorded by Turkey since the 91% posted in June 1998. With the advent of December, the base effect from a year ago came into effect, pulling inflation down.

At 64%, Turkey remains in the seventh place in the world inflation league.

The Istanbul-based ENAG inflation research group of economists, meanwhile, released an end-2022 inflation figure of 138% y/y.

TUIK also gave an official figure of 98% y/y for producer price index (PPI) inflation at end-2022.

On October 27, the central bank hiked its expectation for end-2022 official inflation to 65% (upper boundary: 68%) from the previous figure of 60% (upper boundary: 64%) given in its July inflation report.

The authority forecast end-2023 official inflation at 22% (upper boundary: 27%).

The guidance was based on the assumption that the Turkish lira (TRY) will not experience another crash. As of mid-afternoon local time on January 3, the USD/TRY pair was up 0.7% to TRY 18.74 from 18.6 on October 27.

If the USD/TRY remains stable, Turkey’s official inflation figure looks set to decline to the 30-40%s across 2023.

On December 22, at its latest rate-setting meeting, the central bank’s monetary policy committee (MPC) kept its policy rate constant at 9%.

Turkey’s policy rate, however, essentially remains idle on the sidelines. The government conducts monetary policy via macroprudential measures and non-capital controls. It does not need to cut the policy rate any further. Turkish President Recep Tayyip Erdogan demanded a single-digit policy rate and it was delivered at 9%.

The turbulence-free mood on the global market continues. Turkey’s five-year credit default swaps (CDS) remain below the 600-level, while the yield on the Turkish government’s 10-year eurobonds remains below the 10% level.

 

Main Macro Indicators	2019	2020	Q1-21	Q2	Q3	Q4	2021	Q1-22	Q2	Q3	Q4	2022
GDP Growth (y/y, %)	0.9	1.8	7.3	21.9	7.5	9.1	11.0	7.3	7.6	3.9	-	-
Electricity Consumption (y/y, Dec 25)	-0.6	0.1	5.7	25.8	11.6	8.9	12.4	4.6	1.2	-3.1	-5.7	-0.8
Employed (active, mn)	26.7	24.1	25.8	26.6	27.1	28.6	27.0	27.9	29.7	28.5	-	-
Population (mn)	83.2	83.6	-	-	-	-	84.7	-	-	-	-	-
GDP (per capita, $)	9,127	8,599	-	-	-	-	9,539	-	-	-	-	-
GDP (current, TRYbn)	4,318	5,047	1,393	1,586	1,915	2,314	7,209	2,496	3,419	4,258	-	-
GDP (current prices, $bn)	760	717	189	189	225	199	803	180	219	242	-	-
Inflation (y/y, %, eop)	11.8	14.6	16.2	17.5	19.6	36.1	36.1	61.1	78.6	83.5	64.3	64.3
Lira-loans (%, y/y, Dec 23)	13.9	43.3	34.4	17.5	13.7	20.4	20.4	33.2	55.7	68.6	78.0	-
Policy Rate (%, active, eop)	11.4	17.0	19.0	19.0	18.0	14.0	14.0	14.0	14.0	12.0	9.0	9.0
CA Balance ($bn, Oct)	1.67	-35.5	-7.5	-5.9	2.2	-3.7	-14.9	-19.2	-13.3	-9.3	-0.4	-
CA Balance/GDP (%)	0.2	-5.0	-4.0	-3.1	1.0	-1.8	-1.9	-10.7	-6.1	-3.8	-	-
Budget (TRYbn, Nov)	-124	-173	23	-55	-29	-131	-192	30.8	62.8	-139.1	25.1	-
Budget Balance/GDP (%)	-2.9	-3.4	1.6	-3.5	-1.5	-5.7	-2.7	1.2	1.8	-3.3	-	-
USD/TRY (eop)	5.95	7.44	8.24	8.70	8.89	13.3	13.3	14.7	16.7	18.5	18.7	18.7

 

Table: Main macro indicators.