Macro and Politics

* TURKSTAT will release September foreign trade figures @ 10:00 local time. Preliminary foreign trade data released by the Ministry of Trade for September point to a renewed widening in the foreign trade deficit. According to the preliminary figures, exports rose by 3% y/y to USD22.6bn, while imports increased by 8.8% y/y to USD29.5bn, indicating that the foreign trade deficit widened from USD4.2bn in August to USD7.4bn in September. In light of the preliminary data, we estimate the current account balance to record a surplus of USD2.1bn in September. We expect the balance-of-payments-defined trade deficit to widen from USD2.8bn to USD4.4bn, while the services surplus — supported mainly by tourism revenues — likely narrowed from USD9.5bn to USD7.6bn as net income from the travel item declined. Our year-end current account deficit forecast stands at USD22bn (1.5% of GDP), though we see risks skewed to the downside.

* The Treasury’s will release its 3-month domestic borrowing strategy (November 2025 – January 2026) today @ 17:30 local time. In the previous borrowing strategy, the Treasury had projected total domestic issuance of TL117.6bn against its redemption amounting to TL95bn for November.

*The Economic Confidence Index posted a modest 0.3% monthly increase in October, reaching 98.2, yet remaining below the 100 - threshold. Having stayed below this level since March, the index indicates that perceptions regarding the overall economic outlook remain on the pessimistic side. On a three-month moving average, the index edged up slightly from 97.4 to 98.0 in October. A closer look at the sub-components reveals a divergent trend across sectors. Accordingly, the consumer confidence index declined by 0.3% to 83.6, the services sector confidence index fell by 0.3% to 110.7, and the construction sector confidence index dropped by 5.3% to 83.7. In contrast, the real sector confidence index rose by 1.2% to 102.0, while the retail trade confidence index increased by 3.7% to 113.2.

* According to the results of the October Sectoral Inflation Expectations Survey, 12-month ahead inflation expectations diverged across sectors compared to the previous month. Expectations rose by 1.01pps to 23.26% among market participants and by 1.40pps to 54.39% among households, while declining by 0.50pps to 36.30% for the real sector. Following the stronger-than-expected September inflation print, inflation expectations of market participants and households deteriorated, whereas the real sector’s expectations recorded a modest decline. Overall, there are no clear signs of a lasting improvement in inflation perceptions across economic agents. TURKSTAT will release the October CPI data on Monday, November 3^rd, at 10:00 local time. We expect the monthly CPI to increase by 2.71% in October. A realization in line with our forecast would imply a slight moderation in annual inflation from 33.3% to 33.1%. Our year-end CPI forecast stands at 31.5%.

* During the week of October 17–24, the CBT’s reserves recorded a drastic decline, broadly in line with our calculations based on the analytical balance sheet. Accordingly, the CBT’s net FX reserves slumped by USD11.8bn to USD67.6bn, while gross international reserves declined by USD12.9bn to USD185.6bn. The net reserves excluding swaps also dropped notably by USD12.3bn, standing at USD51.9bn as of the same week. Please recall that the weekly foreign portfolio flows and money & banking statistics, typically released alongside the reserves data in every Thursday, will be published at 14:30 local time on Monday, 3 November, Due to the Republic Day holiday.