Macro and Politics

*TURKSTAT will release January Consumer Confidence Index @ 10:00 local time. Following the weak signals of economic activity indicated by the leading indicators for January, the February data will be closely scrutinized. As a reminder, the consumer confidence index saw a slight decline from 81.3 to 81 in January, while the sub-index related to the assessment on spending money on durable goods over the next 12 months compared to the past 12 months period, which is an important leading indicator in terms of domestic demand, slid from 102.6 to 99.4. In the wake of robust leading indicators in December, which we attribute largely to a demand surge brought forward in anticipation of cost increases, we expect the leading indicators to revert into a weakening trend for the first quarter of 2025. We foresee annual growth in 2025 continuing to decelerate through the second quarter, followed by a rebound in the second half of the year. For the full year, we anticipate GDP growth will be 2.6%, marking a decline relative to 2024.

* The CBT will release weekly foreign portfolio flows, money & banking statistics, and international reserves for the period of February 7 – 14 @ 14:30 local time. Based on our calculations from the CBT’s analytical balance sheet, we estimate that during the week of February 7 – 14, the net international reserves increased by USD5.4bn to USD77.7bn and the gross FX reserves climbed by USD5.7bn to USD173.3bn. To recall the data from the previous week: During the week of January 31 – February 7, the equity and the bond market (excluding the repo transactions) experienced a foreign outflow of USD49.6mn and USD1.5bn, respectively. The last week’s USD1.5bn bond sale by foreigners has been recorded as the largest outflow in this channel in the last 10 years, since the USD1.8bn bond sale observed during the week of January 17–24, 2014. Moreover, the foreigners’ share in the total bond stock retreated to 8.4% from 8.6%. On an annual basis, the equity market recorded a cumulative foreign outflow of USD2.8bn, whereas the bond market (excluding repo transactions) saw a cumulative foreign inflow of USD16bn. Besides, the residents’ FX deposits climbed approximately by USD3bn (gold accounts excluded, EUR/USD parity adjusted) in the period of January 31 – February 7, while the residents’ total FX deposits (including gold, price adjusted) surged by USD3.2bn. Moreover, the CBT’s gross FX reserves climbed by USD1.5bn to USD167.6bn, while net international reserves rose by USD0.6bn to USD72.3bn. Net reserves excluding swaps eased by USD0.2bn to USD65bn, while net swap stock edged up by USD0.8bn to USD7.2bn.