Türkiye is bracing for an intense agenda in November that will be shaped by parliamentary budget discussions, critical inflation and growth data releases as well as a highly anticipated interest rate decision.
A key point will be the debates over the government’s budget proposal for 2025, which has been submitted to Parliament on Oct. 17, initiating weeks of discussions within the Plan and Budget Committee.
The budget envisages spending of TL 14.73 trillion ($430,000) and revenues of TL 12.8 trillion for 2025. That would translate into a budget deficit equivalent to 3.1% of the GDP. The government has allocated TL 1.57 trillion for investments, amounting to some 10.7% of the planned expenditure.
Key highlights from the proposal include substantial allocations to education, defense, health care and infrastructure.
The government has allocated TL 584 billion for spending related to the rebuilding of the southeastern regions struck by devastating earthquakes in early 2023, or some 0.9% of the GDP. For 2023 and 2024, the budget spared for the earthquake represented 3.6% and 2.4% of GDP, respectively.
Following a general discussion scheduled for Wednesday, individual ministry and agency budgets will be reviewed until Nov. 29. The budget is then expected to be presented in full to Parliament in early December for final approval.
The new month will start with the inflation data for October, due on Monday. Tight policy, fiscal measures and base effects brought annual inflation down to 49.38% in September from a peak of 75.45% in May.
That will be followed by the Central Bank of the Republic of Türkiye's (CBRT) last quarterly inflation report of year, due on Nov. 8, and eyes will be on whether it will update its projections for 2024, 2025 and 2026.
Due to its tight policy stance, the central bank expects disinflation to gain pace and forecasts an end-year rate of 38%. It sees inflation easing to 14% next year, projecting it to decline further to 9% by the end of 2026.
As part of a broader policy shift mainly to tackle inflation, authorities have pursued tight monetary and fiscal policy since June 2023. The government has adopted tax and savings measures meant to rebalance the economy and leave behind a steep currency depreciation and price rises.
The central bank has since raised its key policy rate by 4,150 basis points and has left it unchanged for the last seven months. It has still warned that a bump in recent inflation data lifted uncertainty, a hawkish signal that could reinforce views that policy easing will not begin until next year.
Markets will look for any signs of policy shift when CBRT Governor Fatih Karahan convenes the Monetary Policy Committee (MPC) on Nov. 21.
A week after, the CBRT will release its second Financial Stability Report of the year, providing insights into the financial system’s stability and regulatory measures. Eyes will be on Karahan’s remarks for guidance on the bank’s approach.
On Nov. 11, the Turkish Statistical Institute (TurkStat) will publish industrial production and labor statistics for September.
The third-quarter gross domestic product (GDP) data is due on Nov. 29. The economy grew by 2.5% in the second quarter.
The drive to cool prices is expected to lower Türkiye's growth to 3.5% this year, according to the government's prediction. Its three-year policy road map sees growth at 4% next year. The economy grew 4.5% in 2023.
Ankara is expected to announce in December how much it will raise the minimum wage at the start of 2025 after delivering a 49% hike in January of this year, which pushed inflation sharply higher in the first quarter.
Labor and Social Security Minister Vedat Işıkhan has said the Minimum Wage Determination Commission will commence discussions in early December to set the new rate.
Market expectations for the January minimum wage hike stand at around 25%, according to bankers.
The International Monetary Fund's (IMF) mission chief for the country, Jim Walsh, last week said Türkiye should avoid a repeat of its last inflation-fueling hike and focus on support measures for the poorest part of the population instead.
The Treasury and Finance Ministry will announce the central government’s budget performance on Nov. 15. This data will provide a snapshot of fiscal health as the country moves closer to year-end financial planning.