Inflation expectations drop to 12.7 percent

ANKARA

End-year inflation expectations in Turkey eased to 12.69 percent in October from 13.96 in the previous month, according to the Central Bank’s regular Expectations Survey, released on Oct. 18.

Annual consumer price inflation dropped sharply to 9.26 percent in September from 15.01 percent in August.

In the New Economic Program, released in September, the government forecasts an annual inflation of 12 percent for 2019.

According to the program, the country’s inflation targets are 8.5 percent next year, 6 percent in 2021 and 4.9 percent in 2022.

The Central Bank survey also showed that consumer prices are expected to increase by 1.9 percent on a monthly basis in October, while the monthly inflation rate is forecast to ease to 1.13 percent in November.

Participants of the Central Bank survey revised upwards their GDP growth expectations for 2019 to 0.09 percent in October from 0.01 percent in the previous month.

They also increased their economic growth forecast for 2020 from 2.7 percent in September to 3 percent this month.

In the economic program, the government forecasts that the Turkish economy will record a growth rate of 0.5 percent.

Its GDP growth targets for 2020 and 2021 is 5 percent.

The International Monetary Fund has also revised upwards its 2019 growth forecast for the Turkish economy.

In the latest issue of its Global Economic Outlook, released on Oct. 15, the fund said it expected the Turkish economy to expand at 0.2 percent this year versus its previous forecast for a 2.5 percent contraction.

“Growth recovered in Turkey in the first half of the year following a deep contraction in the second half of 2018, benefiting from more favorable global financial conditions and fiscal and credit support,” the IMF said.

According to the participants of the Central Bank’s survey, Turkey’s current account deficit will be only $0.9 billion at the end of this year which is much lower the current account shortfall estimate of $5.9 billion in the previous month.

They also slashed their current account deficit estimate for 2020 to $12.8 billion from $15.95 billion.

The government predicts that the country will post a current account surplus of $1 billion this year, but in 2020, the current account balance will produce a deficit of $9.6 billion.

The Central Bank survey monitors the expectations of decision-makers and experts from financial and real sectors as well as professionals from academia and other institutions related to various economic variables.