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Turkish economic and financials developments 

Turkish economy reported growth of 4.5% YoY

Turkish economy, after having recovered in 2019 and having posted strong growth performance in January and February in 2020, has been losing momentum since mid-March due to the economic lockdowns. Despite the loss in  growth momentum, GDP grew by 0.6% QoQ (seasonally adjusted) in 1Q20.



Industrial production contracted annually by 31.4% in April due to te lockdown measures

In April, when the economic lockdown measures caused by the corona virus are heavily implemented, industrial production fell sharply IP contracted by 30.4% on a monthly basis (seasonally and calendar adjusted) and 31.4% on an annual basis (calendar adjusted) in April.



Manufacturing PMI index exceeded the growth threshold and reached 53.9 in June

The manufacturing PMI index, which rose to 40.9 in May after falling to 33.4 in April due to the lockdown measures taken, increased strongly in June with the quarantine measures being lifted. In June, the PMI index reached 53.9, exceeding the 50 threshold level and signaling growth in economic activity. Production, new orders and employment increased. On the other hand, the improvement in foreign demand conditions will be decisive in the recovery.



Inflation surged to its 10-month high at 12.62% YoY in June.

After having fell to 10.94% in April, annual inflation started to rise and reached to its 10-month high at 12.62% in June. MoM inflation at 1.13% exceeded expectations (market consensus: 0.60%, Akbank: 0.73%) once again. Transportation and restaurants-hotels items made the highest upward contribution to inflation; food prices brought inflation down.



Inflation Report: The Pandemic put its mark on the CBRT Report; inflation expectation down to 7.4% for 2020

The CBRT published the second Inflation Report of the year. Concerns over the Covid-19 pandemic was very prominent in the report. In parallel with global markets, economic activity is expected to contract sharply in the second quarter and recover with the return of domestic demand in the second half. However, foreign demand will also be important in the overall recovery. Inflation is expected to decline due to collapse in commodity prices and plunge in domestic demand conditions. CBRT expects inflation to fall significantly especially from July onwards. While a moderate course is expected in the balance of payments, CBRT sees no problem in reserves to meet short-term liabilities.



CBRT kept the policy rate at 8.25%

CBRT kept 1-week repo rate at 8.25%, stating that considering all factors affecting the inflation outlook, the policy rate was kept unchanged.



The 12-month cumulative CA posted US$3.3bn deficit in April

Effects of the coronavirus outbreak became more evident in Apri l, with t he current balance post ing a deficit of US 5.06 bn primarily due to a widened foreign trade deficit and net deficit recorded in service revenues.



Budget balance posted TRY17.3bn deficit in May

The effects of the Covid-19 outbreak on the budget balance has become more evident with new data. Budget balance posted a deficit of TRY17.3bn in May, with a limited increase of approx. 2.2% in the central government budget expenditures and yet a decrease of budget revenues by 4.8% annually.


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