Macro and Politics

* The third hearing of the lawsuit seeking the annulment of the main opposition CHP’s 38^th Ordinary Congress, convened on 4–5 November 2023, will take place today @10:00 at the Ankara 42^nd Civil Court of First Instance. Today’s hearing begins @10:00 local time.

* The Treasury and Finance Ministry will release August central government budget figures @ 11:00 local time. The central government budget posted a TL23.9bn deficit in July, while the primary balance recorded a surplus of TL110.7bn. In the same period last year, the budget had registered a TL96.8bn deficit alongside a TL4.2bn primary deficit. With the July figures, the 12-month cumulative budget deficit remained broadly unchanged at TL2.3tn, whereas the 12-month primary deficit narrowed from TL532bn to TL417bn. For the January – July period, the budget deficit reached around TL1tn, corresponding to 52% of the government’s full-year projection, while the primary balance posted a surplus of TL241.7bn. In August, the Treasury recorded a cash surplus of TL84.2bn, while the primary balance posted a hefty surplus of TL249.7bn. Cash budget figures are indicative for today’s central government budget data. Accordingly, we estimate that the budget balance will record a surplus of around TL65bn in August. We recently revised our year-end 2025 budget deficit projection to TL2.3tn (3.7% of GDP) from a previous estimate of TL1.9tn (3.1% of GDP).

* The CBT released the Market Participants Survey for September and the year-end 2025 inflation expectation, which edged up from 29.66% in August to 29.69%, rose further to 29.86%, marking the second consecutive monthly increase. That said, the upward revisions remain marginal and continue to point to an end-year CPI expectation below 30%. Participants’ 12-month-ahead CPI expectation declined from 22.84% to 22.25%, while the 24-month-ahead expectation eased from 16.92% to 16.78%. Moreover, market participants’ monthly CPI forecast for September stands at 2.04%. Although we have not yet finalized our own September inflation projection, our preliminary estimate suggests a monthly CPI increase of around 2.2%. We also note that we recently revised our year-end inflation forecast upward from 31% to 39.7%. This adjustment largely reflects higher-than-anticipated increases in unprocessed food prices, which had consistently undershot our expectations in previous months.

* The current account posted a surplus of USD1.8bn in July, slightly below our forecast of USD 1.9bn surplus, yet above the market median expectation of USD1.5bn. As a result, the annual current account deficit narrowed from USD 9.2bn to USD18.8bn, while the January–July cumulative deficit stood at USD21.2bn. The core balance (excluding gold and energy) registered a robust surplus of USD 6bn in July, with the corresponding 12-month rolling surplus rising from USD 46.8bn to USD 47.2bn. Looking ahead, we expect the current account to record a surplus around USD5.5bn in August. For year-end 2025, we maintain our current account deficit forecast at USD 22bn (1.5% of GDP), though we assess the risks to our projection as skewed to the downside.