Macro and Politics

* TURKSTAT will release May Industrial Production (IP) figures today @ 10:00 local time. A brief look at the leading indicators for May's industrial output reveals the following: In May, intermediate goods imports (excluding gold and energy) declined by 3% on a monthly basis, while posting a 2.6% increase y/y. Besides, the Istanbul Chamber of Industry (ICI) Turkey Manufacturing PMI declined slightly from 47.3 to 47.2 in May, marking the lowest level of the year and the weakest reading since October 2024. In line with these early indicators, we expect seasonally adjusted monthly industrial production to continue pointing to subdued sectoral activity in May. Although tighter domestic financial conditions since March 19 have increased downside risks to economic activity, high-frequency indicators do not yet suggest a sharp deceleration in domestic demand dynamics. On the other hand, we note that public spending continues to play a supportive role in the growth outlook. In this context, while acknowledging the prevailing downside risks, we maintain our GDP growth forecast at 3.1%.

* The CBT will release weekly foreign portfolio flows, money & banking statistics, and international reserves for the period of June 27 – July 4 @ 14:30 local time. Based on our calculations derived from the CBT’s analytical balance sheet, we estimate that during the week of June 27 – July 4, gross FX reserves surged by USD10.4bn to USD164.9bn, while net international reserves soared by USD11.5bn to USD57.9bn. We expect today’s official figures to confirm a strong rebound, in line with our projections.