Central Bank of the Republic of Turkey

Türkiye's economy is expected to grow by 3.5 percent this year before the GDP expansion accelerates to 4 percent in 2025 and 4.5 percent in 2026, according to the government's medium-term economic program revealed on Sept. 5.

The net profits of Turkish banks increased 18.8 percent at an annualized pace in January-July, according to banking watchdog data.

The sector saw a 348.7 billion liras ($10.6 billion) net profit as of the end of July, up from 293.4 billion liras last year, the Banking Regulation and Supervision Agency (BDDK) data showed.

Declines in inflation over the next months will further boost the rise in the share of Turkish Lira deposits in total, according to a post on the Turkish Central Bank's blog.

The share of lira deposits in total deposits grew from 48.4 percent to 51.8 percent in July-August, the blog post by researchers and economists working at the bank stated.

The Central Bank has kept its year-end inflation forecasts for 2024, 2025 and 2026 unchanged, vowing to maintain its cautious stance in monetary policy.

The bank projects that inflation will fall to 38 percent at the end of 2024, while its forecasts for 2025 and 2026 are 14 percent and 9 percent, respectively.

Investors and analysts will carefully listen to what the Central Bank has to say about inflation dynamics and the course of its monetary policy going forward when Governor Fatih Karahan unveils the bank's quarterly Inflation Report on Aug. 8.

The report will include the bank's inflation forecasts for this year and next.

The main policy framework will not change, and the main objectives will be preserved when the medium-term program is updated in September, Vice President Cevdet Yılmaz has said.

The operating environment for Turkish banks has improved in recent months due to more orthodox macroeconomic policies driving a reduction in macroeconomic and financial stability risks and increased investor confidence, Fitch has said in a report.

The worst is over in inflation, Treasury and Finance Minister Mehmet Şimşek has said, adding that "we are the beginning of the disinflation process."

"We are implementing a very consistent disinflation program," Şimşek said in a speech he delivered at the Turkish Industry and Business Association's (TÜSİAD) high advisory council meeting in Istanbul.

Following the promising June CPI print, international banks have started to lower their inflation expectations for Türkiye.

Last month, consumer prices increased by 1.64 percent from May, which was lower than expected. The annual inflation rate slowed from 75.45 percent to 71.6 percent.

Consumer prices rose by 1.64 percent monthly in June, bringing the annual inflation rate to 71.6 percent, down from 75.45 percent in May, data from the Turkish Statistical Institute (TÜİK) have shown.

The monthly inflation was lower than the market expectation for a 2.2 percent increase in consumer prices. This was also the lowest monthly inflation recorded in 2024.