Macro and Politics

* TURKSTAT will release March industrial production figures today at 10:00 local time. As a reminder, industrial production posted the rebound we had anticipated in February, with seasonally and calendar-adjusted industrial output rising by 2.6% m/m, while calendar-adjusted annual industrial production increased by 2.2% y/y. However, leading indicators for March point to a renewed loss of momentum in industrial activity. Imports of intermediate goods excluding gold and energy point to a contraction in industrial production in March. Meanwhile, another key leading indicator, the Istanbul Chamber of Industry Turkey Manufacturing PMI, declined from 49.3 to 47.9 in March, marking its lowest level since October and signaling a deterioration in manufacturing activity. Other leading indicators for industrial production also point to a weaker underlying trend in March. Overall, the recent flow of data suggests that, following February’s rebound, industrial production likely recorded a modest contraction as of March.

* The Treasury and Finance Ministry will release April cash budget figures @ 17:30 local time. The primary balance posted a cumulative surplus of TL456bn in the first quarter of the year, while the rolling 12-month primary surplus increased from TL851.8bn to TL958.1bn. Meanwhile, the central government budget recorded a deficit of TL229.9bn in March, whereas the primary balance posted a surplus of TL6bn. As a result, the central government budget registered a cumulative deficit of TL420bn in the first quarter, while the rolling 12-month budget deficit remained broadly stable at TL1.5tn. Our year-end 2026 budget deficit forecast stands at TL3.3tn, corresponding to 4% of GDP.

* Foreign investors recorded net outflows of USD228.4mn from the equity market and USD282.1mn from the bond market (excluding repo transactions) in the week of April 24 – 30. Accordingly, following three consecutive weeks of foreign inflows into both equity and bond markets, last week marked a renewed episode of outflows, while foreigners’ share in the total government bond stock declined from 6% to 5.9%. Meanwhile, the Eurobond market witnessed a net foreign outflow of USD358.4mn during the week. Moreover, in the week of April 24 – 30, residents’ FX deposits (excluding gold, EUR/USD parity effect adjusted) declined by USD2.2bn, while their total FX deposits (including gold, price-adjusted) posted a net decline of USD2.4bn in the week of April 24 – 30. In terms of official reserves, the CBT’s gross FX reserves fell by USD5.6bn to USD165.5bn, net FX reserves declined by USD572mn to USD53.6bn and net reserves excluding swaps slid by USD130mn to USD36.2bn.