Macro and Politics

* October Employment figures will be released @ 10:00 local time. The adjusted unemployment remained unchanged at 8.6% in September, while the rate of composite measure of labor underutilization – consisting of time-related underemployment, potential labor force and unemployment– decreased from 29.8% to 28.6%. Moreover, within the components, the combined rate of time-related underemployment and unemployment edged down from 19.4% to 18%, while the combined rate of unemployment and potential labor supply increased from 20.3% to 20.5%. The decline in the underutilized labor rate in September appears to have been driven by the improvement in time-related underemployment and unemployment. Yet, despite the decrease in September, the indicator remains above 28%, signaling that labor market conditions are still weaker than what the headline unemployment figure suggests. The leading indicators in respect to the employment sector have been continuing to give negative signals. PMI’s related sub-components, the CUR level as well as the recent path of the survey about expectations for number of people unemployed over the next 12-months stand unsupportive for the unemployment rate in the near term. 

* According to TURKSTAT’s foreign trade statistics, exports rose by 2% y/y in October to USD23.9bn, while imports increased by 7.2% y/y to USD31.5bn. As a result, the foreign trade deficit widened from USD6.9bn to USD7.6bn, with the annual deficit increasing from USD89.2bn to USD90.9bn. Within the context of the foreign trade data, we expect the current account balance to register a surplus of around USD1bn in October. Within the context of the foreign trade figures, we expect the current account balance to post a surplus of around USD1bn in October. For the same month, we estimate the balance of payments–defined foreign trade deficit at roughly USD5.4bn, while the services surplus is likely to come in at around USD7.4bn. We estimate the current account deficit at around USD18bn (1.1% of GDP) by end-2025, and project the deficit to widen to USD25bn (1.5% of GDP) by end-2026.

* During the week of November 14 – 21, foreign investors were net buyers of USD71.9mn in the equity market and USD239.1bn in the bond market (excluding repo transactions). Meanwhile, the foreign share in the total government bond stock edged up from 6.8% to 6.9% during the same period. During the same period, the residents’ FX deposits retreated by USD575mn (excluding gold, EUR/USD parity effect adjusted), while their total FX deposits (including gold, price adjusted) decreased by USD241mn during the week of November 14 – 21. In terms of official reserves, the CBT’s gross FX reserves decreased by USD6.8bn to USD180.7bn, net international reserves dropped by USD2.8bn to USD69.3bn and net reserves excluding swaps slid by USD2.7bn to USD54.9bn.

* The economic confidence index rose by 1.3% m/m in November to 99.5, reaching its highest level since March 2024. Although the index remains below the neutral threshold of 100 – indicating that overall sentiment is still on the pessimistic side – the improvement in October and November marks the strongest level of the past eight months. On a three-month moving-average basis, the index inched up from 98 to 98.6. Breaking down the November data, the consumer confidence index increased by 1.6% m/m to 85, while the real sector confidence index rose by 1.2% to 103.2. The services confidence index advanced by 1% to 111.8, the retail trade confidence index gained 0.9% to reach 114.2, and the construction confidence index rose by 1.5% to 84.9.