Macro and Politics

* The Treasury and Finance Ministry will release October central government budget figures @ 11:00 local time. The Treasury’s cash balance posted a deficit of TL195.9bn in October, while the primary balance registered a deficit of TL36bn. Over the first ten months of the year, the cumulative cash deficit reached TL1.8tn, with the primary deficit amounting to TL137.2bn. The October cash balance figures serve as a leading indicator for the central government budget data to be released later today. Taking into account the divergence between the cash-based and accrual-based budget frameworks, we estimate that the central government budget likely recorded a deficit of around TL170bn in October. Our year-end 2025 budget deficit forecast stands at TL2.3tn (3.7% of GDP). Please recall that in the Medium-Term Program (MTEP) covering 2026–2028, the government revised its projections, raising the 2025 budget deficit-to-GDP ratio from 3.1% to 3.6%, and adjusting the 2026 estimate upward from 2.8% to 3.5%.

*The CBT released the results of November Market Participants’ Survey. Participants’ 2025 year-end CPI expectation rose from 31.8% to 32.2%, while the 2026 year-end expectation increased from 22.1% to 23.2%. In addition, the 12-month ahead CPI expectation edged up from 23.3% to 23.5%, and the 24-month ahead expectation rose from 17.4% to 17.7%. The 5-year ahead annual CPI expectation, however, declined slightly from 11.4% to 11.3%. Participants foresee monthly CPI at 1.6% for November and 1.2% for December, while their expectation for January 2026 stands at 3.3%. We expect monthly inflation to decelerate markedly in the final two months of the year, mainly on the back of favorable seasonal factors. Based on the price data we have compiled so far, we estimate that November CPI will likely come in slightly below 1.5%, and that the December reading will ease towards 1%. In line with these calculations, we maintain our end-2025 CPI forecast at 31.5%. Our year-end 2026 CPI forecast remains unchanged at 23%.