Bi-Weekly Report 26 June - 9 July 2018


President Erdogan was sworn in for another five-year term, with substantially expanded powers

President Erdogan names a new cabinet as Turkey moves to an executive presidency

Headline inflation rose sharply to a 14-year high of 15.4% y-o-y in June, mainly due to stronger food inflation and weaker domestic currency



Political uncertainty increases

The NBR maintained its key rate flat at 2.5%



United Patriots: the weakest link in the ruling coalition

Leading indicators point to stronger economic growth in Q2:18



FX-adjusted customer deposit growth accelerated in 5M:18, reaching 8.9% y-o-y in May, on the back of strengthening confidence in the domestic economy

Credit growth (adjusted for FX movements) accelerated in 5Μ:18, reaching a 6-year high of 6.4% y-o-y in May, despite continued large write-offs



FYROM to receive a start date for EU accession talks in June 2019, conditional on further progress on reforms and the implementation of the name agreement with Greece

The 12-month rolling fiscal deficit narrowed to 2.5% of GDP in May from 2.8% in December, mainly on under-executed capital spending



A starting date for EU accession talks to be granted in June 2019, conditional on continued progress in reforms

Economic growth strengthened in Q1:18 (up 4.4% y-o-y), mainly due to buoyant electricity production



Headline inflation rose temporarily to a 5¾-year high of 2.3% y-o-y in June from -0.6% at end-2017

The current account deficit narrowed sharply to 3.3% of GDP on a   4-quarter rolling basis in Q1:18 from a 7-year high of 6.7% in Q4:17, mainly due to an improvement in the ship trade balance



The current account deficit is estimated to have narrowed sharply to 2.8% of GDP in FY:17/18 (July 2017-June 2018) from a 2½-decade high of 6.5% of GDP a year earlier

The capital and financial account, excluding IFI support, is estimated to have comfortably covered the CAD and boosted FX reserves in FY:17/18


Appendix: Financial Markets

Bi-Weekly Report 26 June - 9 July 2018