End-year inflation expectations rise

End-year inflation expectations rise

End-year inflation expectations rise

Inflation expectations for end-2022 increased from 67.78 percent to 68.06, showed the Central Bank’s regular the Survey of Market Participants.

The 12-month ahead inflation expectations also rose from 37.34 percent in last month’s survey to 37.47 percent in the survey, which the Central Bank unveiled on Nov. 18.

Consumer prices are expected to increase by 3.14 percent in November from October and are forecast to advance by 3.31 percent month-on-month in December, according to the survey.

The consumer price index rose by 3.54 percent monthly in October, the Turkish Statistical Institute (TÜİK) reported last month. The annual inflation rate quickened from 83.45 percent in September to 85.5 percent in October

Participants of the survey kept their GDP growth expectations for 2022 unchanged at 5.1 percent but lowered their growth forecast for 2023 from 4.2 percent to 4.1 percent.

The government’s GDP growth target for next year is 5 percent.

Türkiye’s current account deficit is expected to be $48.76 billion at the end of this year, a downward revision from the previous survey’s $49.2 billion. Participants of the survey, however, revised upwards their current account deficit forecast for 2023 from $29.7 billion to $31.09 billion.

They also said they expected the U.S. dollar/Turkish Liras rate to be 19,54 at the end of this year, down from 19.82 in the previous survey.

The Central Bank separately reported on Nov. 18 that Türkiye’s external assets increased by 2.1 percent from the end of 2021 to reach $294.2 billion as of end-September.

Liabilities against non-residents declined by 4.5 percent over the same period to $519.2 billion.

Consequently, the net International Investment Position (IIP), defined as the difference between Türkiye’s external assets and liabilities, was minus $224.9 billion at the end of September 2022, whereas it was minus $255.7 billion at the end of 2021.

As part of the liabilities, direct investment declined by 16.1 percent to $119.0 billion with the contribution of the changes in the market value and foreign exchange rates, the bank said.

Portfolio investment decreased by 11.9 percent from the end of 2021 to $84.6 billion. Non-residents’ equity holdings were down 4.6 percent to $17.6 billion, while their holdings of the Government Domestic Debt Securities (GDDS) declined by 61.6 percent to $1.3 billion.