Turkey’s Economic Brief – 03.02.2017

Turkey’s Economic Brief – 03.02.2017

  1. Turkish Lira gains against emerging currencies

Finally, the Turkish Lira has experienced some improvement in 2017. Despite the negative outlook by both Fitch Credit Ratings which decreased the sovereign rating for Turkey to “Junk” and Standard & Poor’s which put Turkey’s outlook to “negative”, the week was a positive one for the Turkish Lira. Turkish Lira climbed quite a bit this week as it closed at around 3.86 last Friday while today it stands at around 3.75 to the USD.

  • 8% decline in January, worst in 23 years reported by Reuters.
  • Fed held its rate at the first meeting since President Trump came into power.
  • Central Bank of Turkey will continue to take monetary measures to stabilize the Turkish Lira.
  • Emerging currencies rose to multi-week highs after performing poorly in the first month of 2017.

In addition to the record decline of the lira, the inflation rate for January rose up to 9.2% and is predicted to be around 8% for 2017 which was forecasted at 6.5% earlier by the Central Bank.

  1. A rise in Exports

According to the Exporters’ Assembly of Turkey (TIM), Turkey’s exports saw the highest rise in the last 49 months in January, 2017.

  • 15% rise in exports
  • 46% rise in exports of Fruit and Vegetables as compared to Last January.
  • There has been a significant rise in exports to Russia due to the normalization of relations between the countries.
  • Exports to Iraq also increased significantly

Growth in exports is a positive sign for the Turkish economy as they set to rebound from a decrease in Trade last year.  Given the normalization between Russia and Turkey as well as the increase in oil prices, exports are predicted to increase as compared to last year.

Finally, sales of cars increased by 8% in January as compared to last year. Although, investment outlook and ratings decreased for Turkey last week, the Lira rebounded. The Central Bank policies seem to have steered through the initial storm and the near future is looking positive for the Turkish Lira.

 

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