Macro and Politics

* TURKSTAT will release January foreign trade figures @ 10:00 local time. Preliminary data released by the Ministry of Trade point to a modest narrowing in the external trade deficit in January compared to the previous month. According to the flash data, exports declined by 3.9% y/y to USD20.3bn, while imports remained broadly flat, edging up by 0.03% y/y to USD28.7bn. As a result, the monthly trade deficit narrowed to USD8.4bn in January, down from USD9.3bn in December. On a rolling 12-month basis, however, the deficit widened slightly from USD92bn to USD92.9bn. Based on the preliminary trade figures, we expect the current account balance to post a deficit of approximately USD6.5bn in January. We anticipate that the balance-of-payments defined trade deficit will ease marginally to USD7.2bn, while the services balance is likely to generate a surplus of around USD2.7bn. Our year-end 2026 current account deficit forecast stands at USD30bn (1.7% of GDP). That said, we assess the risks to our projection to be skewed to the upside.

* TURKSTAT will release February Economic Confidence Index @ 10:00 local time. The Economic Confidence Index was unchanged in January, holding steady at 99.4 and preserving its highest level since March 2025. While the index remaining below the 100-threshold continues to signal that overall sentiment is still in pessimistic territory, the gradual rise from 96.3 in July to 99.4 suggests that the deterioration in perceptions has been losing momentum. A breakdown of the sub-components shows a mixed picture across sectors. Consumer confidence edged up by 0.3% to 83.7, whereas the Real Sector Confidence Index declined by 0.7% to 103.0. Confidence in the services sector improved by 1.3% to 113.8, while the retail trade confidence index fell by 2.4% to 112.6. Meanwhile, construction sector confidence increased by 1.5% to 85.7. Overall, the index’s ability to remain at elevated levels indicates that there has been no material weakening in economic sentiment at the start of the year, although the pace of improvement appears uneven across sectors.

* The CBT will release weekly foreign portfolio flows, money & banking statistics, and international reserves for the period of February 13 – 20 @ 14:30 local time. Based on our calculations derived from the CBT’s analytical balance sheet, we estimate that gross FX reserves slid by USD5.8bn to USD206.1bn during the week of February 13 – 20. We expect the official figures to broadly confirm our estimates. To recall the previous week’s data: Foreign investors recorded net purchases of USD322.2mn in equities and USD1.3bn in government bonds (excluding repos) during the week of February 6 – 13. Over the same period, the foreign share in the total government bond stock increased from 9% to 9.2%, marking the highest level since February 2020. Equity inflows thus extended to an eleventh consecutive week, bringing cumulative foreign purchases over this eleven-week period to USD2.8bn. In the local bond market, foreign participation has exhibited a more sustained and increasingly visible recovery since late October. From the week of October 31 - when inflows began to gain clearer momentum - cumulative foreign bond purchases have reached USD8.1bn. On a year-to-date basis, foreign investors have accumulated USD1.9bn in equities and USD5.8bn in local bonds (excluding repos). Moreover, during the week of February 6 – 13, the residents’ FX deposits retreated by USD1.4bn (excluding gold, EUR/USD parity effect adjusted), while their total FX deposits (including gold, price adjusted) slid by USD1bn. In terms of official reserves, the CBT’s gross FX reserves increased by USD4.3bn to USD211.9bn, net international reserves rose by USD4.6bn to USD95.7bn and net reserves excluding swaps climbed by USD3.8bn to USD81.4bn.