Macro and Politics

*The CBT will release April Balance of Payment figures today @ 10:00 local time, and we expect the current account balance to register a deficit of USD7.5bn. We maintain our year-end current account deficit forecast at USD22bn, corresponding to 1.5% of GDP.

* The CBT will release the results of the June Market Participants’ Expectations Survey today @ 10:00 local time. According to the results of the May Survey, the participants’ year-end CPI expectations saw a modest uptick to 30.35%. Meanwhile, 12-month ahead inflation expectations declined from 25.56% to 25.06%, whereas 24-month ahead expectations edged up slightly from 17.7% to 17.77%.

* The Treasury and Finance Ministry will release May central government budget figures @ 11:00 local time, and we expect the budget to post a surplus over TL200bn. The Treasury recorded a cash surplus of TL247.1 in May, bringing the cumulative cash deficit in the Jan-May period to TL837.4bn. It is worth noting that the sizeable surplus recorded in May was largely driven by a surge in corporate tax revenues, stemming from the structural impact of the removal of the fourth corporate provisional tax payment, which was abolished starting in May 2023. The removal of this instalment has led to a concentration of corporate tax declarations in May, reflecting both the first-quarter provisional taxes for the current year and final corporate tax filings for the previous year’s last quarter. This front-loading effect has significantly inflated revenue figures in May. Hence, we expect today’s central government budget release to show a substantial rise in corporate tax revenues, likely resulting in a monthly budget surplus exceeding TL200bn. However, we anticipate this temporary revenue boost to fade starting in June, with the budget balance returning to deficit territory in the subsequent month. We forecast the 2025 budget deficit at TL1.9tn, corresponding to 3% of GDP.