As Türkiye braces for a packed calendar of economic data releases starting next week, markets will have their eyes on key figures like growth, exports and inflation, as well as updates to the government's medium-term program, which is nearing its final stages of revision.
Data due on Monday will likely show Türkiye's economic growth eased in the second quarter of this year as tighter monetary policies weighed.
The gross domestic product (GDP) expanded by 5.7% in the first quarter of this year, with strong domestic demand pushed up by a minimum wage hike and households bringing purchases forward in expectation of higher inflation ahead.
Treasury and Finance Minister Mehmet Şimşek has said the economy "is moving toward more balanced and sustainable growth."
For the second quarter, the median estimate in a Reuters poll of 11 economists was for GDP growth of 3.2%, with forecasts ranging between 1.6% and 4.2%. Economists surveyed by AA Finance anticipate that GDP grew by 3% year-over-year.
The economy grew an annual 4.5% in 2023 and 3.9% in the second quarter of that year despite a slowdown in main trading partners and devastating earthquakes in February.
Economists expect tight monetary policies and fiscal measures will continue to slow domestic demand through the end of the year.
GDP growth in 2024 is expected to be 3.35%, based on the median estimate in the Reuters poll. Predictions ranged from 3% to 3.5%.
In the minutes of its rate-setting meeting, released on Tuesday, the central bank said that data suggests second-quarter annual and quarterly GDP growth rates will cool compared to the previous quarter.
The Central Bank of the Republic of Türkiye (CBRT) raised its policy rate by 4,150 basis points in a tightening cycle since June last year. Since March, it has held rates at 50% to head off inflation risks.
The government has pledged to cool inflation, change the composition of economic growth and attain sustainable levels.
Narrowing trade deficit
Monday will also feature provisional foreign trade data for August, demonstrating whether the narrowing trend in Türkiye's foreign trade deficit continues.
Exports in July grew 13.8% compared to the same month last year to $22.5 billion, the highest level ever for the month. Imports dropped by 7.9% in July to $32.3 billion.
The foreign trade gap narrowed by 42% to $7.3 billion. This fall reflects progress in efforts to reduce the high current account deficit, Şimşek said this week.
Exports are among the priority areas the Turkish government seeks to rely on as they rebalance the economy's growth composition.
Exports amounted to $148.8 billion from January through July, up 4.1% year-over-year, while imports fell by 8.4% to $198.6 billion.
The seven-month trade deficit narrowed by 32% from a year ago to $49.8 billion.
The 12-month rolling exports also hit a record, reaching $261.5 billion, an increase of 3.4% every year, according to the minister.
As part of its medium-term program, the government had set an export target of $267 billion for 2024. Shipments hit a record $256 billion in the whole of 2023.
Sharp decline in inflation
Separate data on Tuesday is forecast to show Türkiye's annual inflation continued its sharp decline in August, while monthly inflation is seen rising amid a gas price hike, according to surveys.
The median estimate of nine economists in a Reuters poll saw annual inflation falling to 52.2% in August from 61.78% in July, after hitting its highest level since late-2022 in May. Forecasts ranged from 51.49% to 52.74%.
Economists polled by AA Finance also estimate inflation easing to 52.2% in August.
Month-over-month, inflation is rising to 2.64%, with forecasts ranging between 2.15% and 3.1% on the back of a natural gas price hike.
In August, the unit price of natural gas for residential use was raised by 38%, the first hike in almost two years. According to calculations by economists, the natural gas price hike in August will add some 65 basis points to inflation.
Monthly inflation was high in January and February, largely due to a big minimum wage hike and new-year price updates, before slowing to some 3.2% in March and April. After dipping in June, inflation rose to 3.23% in July due to mid-year price adjustments.
Earlier this month, CBRT Governor Fatih Karahan said the rise in monthly inflation in July is temporary as the bank held its end-year inflation forecast steady at 38%.
The bank has said it is monitoring inflation risks and vowed to tighten further in the case of a significant deterioration in inflation.
Since March, the central bank has kept the policy rate steady, considering the lagged effects of the monetary tightening and said it remains attentive to inflation risks.
In the minutes of its rate-setting meeting last week, the central bank said monthly inflation will slow in August compared to the previous month, led by the low course of food prices.
Its next Monetary Policy Committee (MPC) meeting is scheduled for Sept. 19.
Unemployment, current account
On Sept. 10, authorities will announce labor force statistics for July. The unemployment rate had increased by 0.7 percentage points in June, reaching 9.2%.
Also to be released on the same day are the July figures for the industrial production index and foreign trade indices, which will be closely watched. Industrial production decreased by 4.7% annually and 2.1% monthly in June.
On Thursday, the CBRT will announce the balance of payments statistics for July. Officials have said foreign trade data this week means the annual current account deficit has likely fallen below $20 billion in July.
The broadest measure of trade and investment flows with the outside world had a surplus of $407 million in June, the first in nine months. It was driven by lower gold imports, flat energy bills and more substantial tourism revenues.
The annualized shortfall more than halved to $24.8 billion from $53.6 billion a year ago but slightly deteriorated from $24.5 billion in June.
On Sept. 16, the Treasury and Finance Ministry will announce the central government budget realizations for August. On the same day, we will also see the release of the service production index for July and the producer price index for agricultural products for August.
A day after, the Turkish Statistical Institute (TurkStat) will release housing sales statistics for August.
Sales rebounded by 16% in July to 127,088 homes, the highest level this year, despite elevated mortgage rates and high prices plaguing the industry.
Eyes on economic program update
Markets will largely focus on new forecasts as part of the medium-term economic program (MTP), which the government is expected to announce as soon as next week.
The program, which serves as Türkiye's three-year roadmap, will set key macroeconomic indicators for the 2025-2027 period, including inflation, employment, growth, exports and the current account deficit.
Alongside the MTP, preparations for the 2025 budget will also be finalized, with the proposal set to be submitted to the Parliament in October after final adjustments.
Later in September, President Recep Tayyip Erdoğan is expected to chair a meeting of the Investment Advisory Council. It will mark the council's first meeting since 2016.
Many prominent CEOs and board chairpersons are reported to have been invited to the high-profile meeting, including names like Elon Musk, the chief executive of SpaceX and Tesla and owner of X, formerly known as Twitter and Amazon CEO Andy Jassy.