Macro and Politics

*TURKSTAT will release December Consumer Confidence Index @ 10:00 local time. The consumer confidence index edged up from 83.6 to 85 level in November. It is important to underscore that the consumer confidence index — which ranges from 0 to 200 — signals pessimism when it falls below 100, and optimism when it exceeds that threshold. A breakdown of the November consumer confidence index reveals the following: The sub-index reflecting the financial situation of household at present increased from 67.7 to 69.6 level, the sub-index measuring financial situation expectation of household over the next 12 months rose from 84.2 to 85.7,  general economic situation expectation over the next 12 months climbed from 76.8 to 79.6 and  the sub-index tracking assessment on spending money on durable goods over the next 12 months — a key indicator of domestic demand — increased from 104 level to 105 in November. The Consumer Confidence Index, which has remained broadly flat within the 84 – 85 range since April and continues to stand below the 100 – threshold, indicates that the prevailing pessimism in consumer sentiment persists.

* Foreign investors posted a modest equity inflow of USD26.3mn during the week of December 5 – 12, while bond markets recorded a strong foreign inflow of USD339.6mn (excluding repo transactions). Moreover, the foreign share in the total government bond stock remained unchanged at 7.3% during the same period. Following USD2bn of bond purchases throughout November and a brief USD23.7mn net outflow in the previous week, today’s data suggest that foreign demand for local bonds has regained momentum. Going forward, the sustainability of foreign inflows will remain closely tied to perceptions surrounding the interest rate path and the strength of standard portfolio channels. During the same period, the residents’ FX deposits climbed by USD202mn (excluding gold, EUR/USD parity effect adjusted), while their total FX deposits (including gold, price adjusted) surged by USD602mn. In terms of official reserves, the CBT’s gross FX reserves increased by USD4.4bn to USD190.9bn, net international reserves rose by USD2bn to USD79.5bn and net reserves excluding swaps climbed by USD4.1bn to USD66bn.

* The short-term external debt stock posted no palpable change in October, materializing at USD165.7bn. In terms of short-term debt statistics, we believe that “debt stock on a remaining maturity basis,” calculated based on the external debt maturing within 1 year or less regarding the original maturity, is rather critical, which is at USD226bn as of October 2025. Of this total, USD25.9bn is attributed to loans taken by resident banks and private sector affiliates from their branches and affiliates abroad. Stripping this amount from the total results in USD200bn. We also add 12-month forward-looking CAD expectations on this amount so as to reach Turkey’s annual external financing need (EFN).  Accordingly, we calculate EFN as of October 2025 around USD225bn.