Macroeconomics

Quarterly macroeconomic analysis of UniCredit Bulbank:

Economic growth in 2022 will remain at last year's levels amid growing fears of inflation

In November, US consumer prices rose at an unprecedented rate since nearly 40 years, US government sources said, stressing that inflation is threatening the world's largest economy and, at the same time, threatening public support for President Joe Biden.

The country will see the cumulative effects of its current monetary policy in the first half of the next year, Central Bank Governor Şahap Kavcıoğlu said on Dec. 2, adding that the soaring inflation will ease soon.

The Organization for Economic Co-operation and Development (OECD) has revised up its 2021 growth forecast for Turkey by 0.6 percentage points to 9 percent.

"In the absence of further shocks, GDP growth is projected to be 9 percent in 2021 before easing to 3.3 percent in 2022 and 3.9 percent in 2023," the OECD said in its Economic Outlook report released on Dec. 1.

Soaring energy prices took eurozone inflation to its highest rate on record in November, official data showed on Nov. 30, challenging the European Central Bank's resistance to tightening monetary policy earlier than planned.

The Turkish Central Bank on Nov. 18 cut its benchmark one-week repo rate by 100 basis points from 16 percent to 15 percent in line with market expectations.

At its 11th Monetary Policy Committee meeting this year, the bank said recent increases in inflation had been driven by supply-side factors such as rising food and import prices, especially in energy, and supply constraints.

President Recep Tayyip Erdoğan has reiterated his continued fight against high interest rates and inflation, vowing to take measures to protect the low-income groups in the face of rising living costs. 

Turkey's current account balance posted a surplus of $1.65 billion in September, bringing the 12-month rolling deficit to $18.4 billion, the Turkish Central Bank revealed on Nov. 11.

In September 2020, the current account balance posted a $2.3 billion deficit.

Turkish Central Bank Governor Şahap Kavcıoğlu on Oct. 27 underlined the importance of turning the current account deficit to the positive territory by ramping up credits to exporters.

Turkey's Central Bank (CBRT) on Oct. 28 revised up its year-end inflation forecasts for the next three years while keeping its medium-term target at 5 percent.