Goldman sees Turkey inflation of near 80% before relief comes
goldman sachs
Goldman Sachs said on Friday it expects annual inflation in Turkey to reach almost 80% before easing to 60% by the end of 2022, thanks to so-called favorable base effects. CB’S Monthly Survey put 12-mth ahead CPI at 40%, still awful, but a vast improvement compared to the current headline of 71% per annum.
Inflation in Turkey hit 73.5% in May, stoked by a currency crisis last year and soaring energy costs due to Russia's invasion of Ukraine.
The lira lost 44% against the dollar in 2021 in addition to another 24% so far this year. It remains under pressure as real yields in Turkey are deeply negative amid a global tightening cycle.
Turkey’s Slow-Motion Currency Crash
Central Bank Monthly Expectations Survey: 12-mth CPI at
Central Bank of Turkey released its monthly Survey of Expectations by Market and Economic Participants on Friday, which reveals 12-mth ahead CPI inflation at 40%. The survey revealed increasing pessimism about future economic conditions. Here are some of the highlights
Policy rate would be kept stable in this month and next 3 months, according to the CBRT’s Survey of Market Participants.
- Policy rate (14%) would be kept stable in this month, and next 3 months. The next MPC meeting would be held on June 23.
- CPI expectations continued to deteriorate for short and medium terms. Year-end CPI expectation reached to 64.59%, up by 667bps MoM and expectations for 12-month ahead increased by 463bps to 37.91%. Additionally, expectations for 24-month ahead increased by 250bps MoM to 22.04% whereas expectations for 5-year ahead decreased by 13bps to 9.83%.
- Expectations of USDTRY currency for the year-end increased by 7.5% to 18.89 and 12-month ahead increased by 12.1% to 20.7.
- Economic growth expectations increased to 3.5% from 3.5% for 2022, but decreased to 3.8% from 4% for 2023.
- Current account deficit expectations increased to USD 37bn from USD34.4bn for 2022 and increased to USD 23.1bn from USD 22bn for 2023.
