Macro and politics

*Credit rating agency Fitch is expected to release Turkey’s sovereign rating review today. Any possible review announcement would likely come late at night Turkish time. It’s important to note that these calendars are only reference points and do not guarantee that the agencies will conduct a review or make a new rating decision. Please recall that Fitch last raised Turkey’s credit rating from "B+" to "BB-" on September 6, 2024, while revising the outlook from "positive" to "stable." In today’s anticipated review, we do not expect any changes to either Turkey's credit rating or its outlook.

* During the week of January 17 – 24, the equity and the bond market (excluding repo transactions) witnessed a foreign inflow of USD345.4mn and USD382.9mn, respectively. Furthermore, the foreigners’ share in the total bond stock climbed further to 8.7% from 8.5%, which stands for the highest level since February 2020. The residents’ FX deposits increased by USD748mn (gold accounts excluded, EUR/USD parity adjusted) in the period of January 17 – 24, while the residents’ total FX deposits (including gold, price adjusted) rose by USD586mn in the week of January 17 – 24. Moreover, the CBT’s gross FX reserves climbed further by USD4.3bn to USD167.7bn, while the net international reserves rose by USD2.2bn to USD73.7bn. Net reserves excluding swaps also increased by USD3.6bn to USD62.9bn.

*TURKSTAT will release December foreign trade figures 10:00 local time. According to the preliminary data of the Ministry of Trade, import and export figures for December materialized at USD32.3bn and USD23.5bn, respectively, resulting in a trade deficit of USD8.8bn, indicating an increase compared to the previous month’s level of USD7.5bn. We expect the current balance to revert to a deficit in the last two months of the year, with the annual deficit increasing slightly. Along with the rise in the trade deficit, we expect the current balance to register a deficit around USD3.5bn in December, with the annual deficit to end 2024 around USD9bn (0.7% of GDP). Our year-end current account deficit expectation for 2025 is USD15bn (1% of GDP).

* The Economic Confidence Index increased by 0.8% m/m in January, rising to 99.7 level and reaching the highest level since April. Yet, the index level has remained below the critical threshold value of 100 since March. The Economic Confidence Index, which ranges between 0 and 200, reflects a pessimist outlook regarding the general economic outlook when it falls below the 100 threshold. Examining the monthly changes in the subcomponents of the January data: Consumer confidence index decreased by 0.4% to 81, real sector confidence index dropped by 0.1% to 102.6, services confidence index increased by 2.5% to 116.5, retail trade confidence index rose by 1.4% and became 114.5 and construction confidence index climbed by 2.6% and became 91.7 in January compared to the previous month.