Turkish expectations for inflation deteriorate at slowest pace in 18 months

Turkey’s inflation rate is expected to end the year at 70.6 percent, according to the average estimate in a monthly central bank survey of market participants.

The August forecast for December inflation compared with a prediction of 69.9 percent in July, the survey, published on Friday, showed. It was the slowest deterioration in inflation expectations since February 2021.

Turkey’s consumer price inflation accelerated to 79.6 percent last month, the highest annual rate since 1998. Foreign financial institutions expect annual inflation to start slowing after October or November due to favourable so-called ‘base effects’ from the same period a year earlier.

Expectations for year-end inflation in 2022 had stood at 30.3 percent in January.

The average prediction for the lira’s value against the dollar at the end of the year stood at 19.5994 compared with 19.2087 in July. The lira, which has lost more than a quarter of its value this year, was trading down 0.1 percent at 17.96 per dollar on Friday.

The lira will probably end the year at 19.5 per dollar and weaken to 21 per dollar by the end of June next year, British bank HSBC said this week, according to BloombergHT television. The bank said it expected the lira to depreciate more sharply in the autumn when seasonal tourism revenues would be less supportive and exports weaker due to the recession pressure in Europe.

Forecasts for annual economic growth this year improved to an average of 3.6 percent compared with 3.5 percent in July.

Predictions for the year-end current account deficit stood at an average $39.3 billion compared with $37.5 billion in July.

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