Macro and Politics

*TURKSTAT will release 3Q24 GDP figures today @ 10:00 local time. We have observed that the deceleration in economic activity became more pronounced in the third quarter, as leading indicators had signaled, with widespread reports from firms indicating that demand conditions were challenging. Accordingly, we expect the Turkish economy to contract on a sequential basis and expand by around 1.5% y/y in 3Q24, which is below the median estimate of 2.4% y/y growth, according to a survey conducted by Foreks. We forecast the GDP growth for the end of 2024 to be approximately 2.8%.

* According to the foreign trade figures released by TURKSTAT, exports rose by 3.1% y/y to USD23.5bn, while imports remained unchanged y/y at USD29.4bn in as of October. Accordingly, the trade deficit widened slightly to USD5.9bn from USD5.1bn. Moreover, the annual deficit has ameliorated to USD78.6bn from USD77.9bn, which stands for the lowest level since June 2022. Following the official release of October foreign trade figures, we expect the current account balance to post a surplus around USD1bn in October. We also foresee the current account deficit to conclude the year around USD9.5bn (0.7% of GDP), excluding the imminent revisions of the past data.

*The economic confidence index dropped to 97.1 from 98 level in November, while the 3-months average rose to 96.7 from 95.4. The index indicates an optimistic outlook on the general economic situation when it is above 100, and a pessimistic outlook when it is below 100. It is noteworthy that the index has remained below the 100 level since March. Regarding the sub-components of the November data, the consumer confidence index decreased by 1% m/m to 79.8, the real sector confidence index increased by 1.2% m/m to 103.4, the services confidence index dropped by 2.9% m/m to 111, the retail trade confidence index surged by 9% m/m to 111.7, and the construction confidence index climbed by 1.7% to 87.8 in November.

* The foreign investors were the net sellers on both the equity and bond markets in the week of November 15 – 22. Accordingly, the equity and the bond market (excluding repo transactions) experienced a net foreign outflow of USD272.3mn and USD814.2mn, respectively. Besides, the net foreign buying activity on the bond market came to a halt after six consecutive weeks of inflows, while the foreigners’ share in total bond stock eased to 7.6% from 7.8%. Moreover, the residents’ FX deposits slumped by USD2.3bn (gold accounts excluded, EUR/USD parity adjusted) in the period of November 15 – 22, while the residents’ total FX deposits (including gold, price adjusted) slid by USD2bn in the week of November 15 – 22. Furthermore, the CBT’s gross FX reserves decreased merely by USD26mn to USD156.8bn, while the net international reserves rose by USD1.82bn to USD60.8bn. Lastly, the net reserves excluding swaps eased by USD2.43bn to USD41.6bn.