"At the TCMB Monetary Policy Committee Meeting, Inflation and Geopolitical Risks Were Emphasized."

Critical Economic Statements from the CBRT

The Central Bank of the Republic of Turkey (CBRT) published the summary of the Monetary Policy Board (PPK) meeting held on January 22, 2023. This important summary reveals that despite the easing of uncertainties in global trade policies, geopolitical risks have significantly increased.

Global Growth and Trade Outlook

The summary points out that there has been a limited improvement in global growth forecasts, while it is projected that the global growth index weighted by the export shares of Turkey’s foreign trade partners will increase by 2.1 percent in 2025 and 2.4 percent in 2026. However, rising protectionism and recent geopolitical developments continue to keep downside risks to the growth outlook alive.

Inflation and Interest Rate Policies

It is noted that the risks regarding inflation remain valid on a global scale. It is expressed that central banks are continuing to implement interest rate cuts by taking these risks into account. However, fluctuations in risk appetite in recent periods are increasing portfolio outflows from equity markets in emerging economies.

Retail Sales and Service Sector Developments

In November, the retail sales volume index showed an increase of 1.5 percent on a monthly basis and 3 percent on a quarterly basis. However, the quarterly growth rate in retail sales excluding gold has remained lower. The trade sales volume index recorded a monthly increase of 0.5 percent, but due to a decrease in wholesale trade, it fell by 0.4 percent on a quarterly basis.

Last Quarter Indicators

Indicators for the last quarter show that the support provided by demand conditions to the disinflation process has diminished. In survey data for manufacturing industry firms, an increase in registered domestic orders has been observed. In these days following the New Year, it is noteworthy that card spending has continued to rise as of the last quarter.