Macro and Politics

* TURKSTAT will release June foreign trade figures 10:00 local time. Preliminary data released by the Ministry of Trade point to a widening in the foreign trade deficit in June. According to the preliminary figures, exports rose by 8% y/y to USD20.5bn, while imports increased by 15.3% to USD28.7bn. Based on these figures, the trade deficit expanded from USD6.6bn to USD8.2bn in June, while the rolling 12‑month deficit widened from USD86.8bn to USD89.1bn.

* The CBT will release weekly foreign portfolio flows, money & banking statistics, and international reserves for the period of July 18 – 25 @ 14:30 local time. To recall the data from previous week: In the week of 11 – 18 July, foreigners registered a net purchase of USD209.4mn in equities and USD36mn in government bonds (excluding repo transactions). Thus, the foreigners’ share in total bond stock rose a tad from 6.2% to 6.3% within the mentioned week. Within the mentioned period, residents’ FX deposits surged by USD2bn (excluding gold accounts and adjusted for the EUR/USD parity effect), driven primarily by corporates’ demand as household FX deposits increased marginally by USD104mn, while corporate FX deposits soared by USD1.9bn. Examining the CBT’s reserves reveals that during the week of 11 – 18 July, the gross FX reserves rose by USD2.3bn to USD168.7bn and the net international reserves increased by USD3bn to USD62.7bn. Moreover, the net reserves excluding swaps climbed by USD3.3bn to USD44.3bn.

*The Treasury will release its next three-month (August – October 25’) domestic borrowing strategy today @ 17:30 local time. According to the previous program (July – September 25’), the Treasury has a domestic redemption of TL314.7bn in August, while in return plans to borrow TL399.5bn throughout the month.

*The adjusted unemployment rate increased from 8.4% to 8.6% in June. As per the broad-based unemployment calculations: The rate of composite measure of labor underutilization – including time related underemployment, potential labor force and unemployment – rose from 31.1% to 32.9%, marking a record-high level. Moreover, the combined rate of time-related underemployment and unemployment increased from 20.8% to 23%, while the combined rate of unemployment and potential labor force remained unchanged at 20.3%. Beyond the headline unemployment figure, we closely monitor the broad-based indicator of labor underutilization, where we expect elevated levels to persist over the coming period.

*The Economic Confidence Index declined from 96.7 to 96.3 in July. Remaining below the 100-threshold since March, the index continues to signal that perceptions regarding the overall economic outlook remain on the pessimistic side. According to the sub-components of the July data: the Consumer Confidence Index declined by 1.8% to 83.5, while the Real Sector Confidence Index edged up by 0.5% to 98.9. The Services Confidence Index fell by 0.8% to 110.0, the Retail Trade Confidence Index eased by 0.5% to 107.9, and the Construction Confidence Index rose by 2.2% to 88.8 compared to the previous month.