Turkey's economy returns to a 'positive cycle', finance minister says
All financial indicators including gross foreign exchange reserves and the main stock index BIST100 (.XU100), opens new tab have returned to mid-March levels with the steps taken to manage the economy, Simsek said in a live interview with broadcaster Kanal 7.
The detention of Istanbul Mayor Ekrem Imamoglu, President Tayyip Erdogan's main political rival, on March 19 triggered market turmoil that prompted an emergency interest rate hike and drained foreign currency reserves.
Turkey's central bank this week cut its benchmark interest rate by a larger-than-expected 300 basis points to 43%, resuming an easing cycle that had been disrupted in March.
Credit ratings agency Moody's on Friday upgraded Turkey's rating to "Ba3" from "B1," citing improving monetary policy credibility, easing inflation and reduced economic imbalances.
Turkey's government expects that inflation will end the year "within the central bank's mid-point to high forecast range. We expect a figure below 29%," Simsek said.
Turkish annual consumer price inflation slowed to 35% in June, extending its fall from a peak of around 75% in May 2024. The central bank's year-end inflation mid-point estimate currently stands at 24%, in a forecast range of 19% to 29%.
Turkish economic growth has remained below forecasts in recent months and there is a "high probability" of a limited deviation from the budget revenue target, Simsek said.
Based on its three-year policy roadmap published last September, the government predicts 4.0% gross domestic product growth this year. According to the median forecast of 34 economists in the July 18-23 Reuters poll, growth in Turkey's GDP is expected to be 2.8% this year, slower than 3.2% in 2024.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
13 minutes ago
- Reuters
Morning Bid: Split Bank of England set to cut rates
A look at the day ahead in European and global markets from Kevin Buckland There's little doubt in the market's mind that the Bank of England will cut interest rates later today by another quarter point, making it five cuts in the past year. But a tricky balance between a slowing jobs market and nagging inflation worries could see the board split three ways, with two of the nine members potentially pushing for no change, while two others may lobby for a half-point reduction. The board's language will also be key, with a focus on whether the message of "gradual and careful" policy easing remains in place. Any signs of an extended pause would be a blow for Finance Minister Rachel Reeves and Prime Minister Keir Starmer, who have promised to speed up Britain's slow economic growth. Away from the UK, the market's broad focus falls squarely on another central bank with some similar problems. The U.S. Federal Reserve has seen the macroeconomic data take a distinct downward turn over the past week - particularly the labour market - just days after the board opted to forgo a rate cut. But with worries about simmering inflationary forces as a result of President Donald Trump's bellicose tariff campaign also showing up in the data, Fed Chair Jerome Powell's wait-and-see stance also finds some support. Hanging over the Fed's debate - which saw two Trump-chosen Fed governors dissent in last week's decision - are the president's persistent and aggressive calls to cut rates, often framed with name-calling and threats to fire Powell before his chairmanship expires in May. The market's eyes are on Trump's short list of four possible replacements, and more immediately, his pick to fill a governor role abruptly vacated by Adriana Kugler. Meanwhile, Trump's barrage of tariff threats continues unabated, with a 100% duty on semiconductor imports and additional levies on India for importing Russian oil among the latest. Trump plans to talk to Russian President Vladimir Putin next week about ending the war in Ukraine, which is buoying the euro while injecting uncertainty into the outlook for crude oil. Overall though, the market has become more inured to the constant tariff sabre-rattling and Japan's Topix index (.TOPX), opens new tab marched to a record peak while tech-heavy Taiwan shares (.TWII), opens new tab leapt more than 2% to the highest in over a year. Pan-European STOXX 50 futures are pointing 0.2% higher, with Wall Street futures also up by about the same amount. A strong U.S. earnings season is one reason for that. Coming up are Eli Lilly, ConocoPhillips and Warner Bros Discovery, among many others. Europe has a busy day of earnings reports as well, with Allianz, Siemens and Merck among them. On the data front, Germany has trade figures and industrial production numbers, while Britain gets a reading on house prices. Key developments that could influence markets on Thursday: -BoE policy decision -UK Halifax house prices (July) -German exports, imports, industrial production (all June) Trying to keep up with the latest tariff news? Our new daily news digest offers a rundown of the top market-moving headlines impacting global trade. Sign up for Tariff Watch here.
Reuters
43 minutes ago
- Reuters
Wary of sticker shock, retailers clash with brands on price hikes
LONDON, Aug 7 (Reuters) - Caught between rising costs from tariffs and belt-tightening consumers, big retailers are clashing with the producers of consumer brands such as Nivea-maker Beiersdorf ( opens new tab and brewer Heineken ( opens new tab, as they look to avoid sticker shock that could hurt sales. The disputes - which have dented some brands' sales - underscore the challenge for consumer goods makers and sellers, with inflation and tariffs pushing up input costs and price spikes in commodities such as coffee. While pricing talks have never been easy, tariffs are escalating already high food inflation since the pandemic, making grocery bills more contentious and political as consumers grapple with a cost-of-living crisis. "We all should be very well aware of consumer budgets," Frans Muller, CEO of supermarket company Ahold Delhaize ( opens new tab, which owns U.S. chains Food Lion, Hannaford, and Stop & Shop, told Reuters on Wednesday. He said conversations with consumer goods companies over pricing were "tight," adding that the industry's focus was on increasing sales volumes rather than increasing revenue by hiking prices. "That is the wrong way of supporting customers and the wrong way of growing the business itself." Ahold has in-house teams that track commodity, energy, and labour costs, and own-brand products it can compare with to establish whether price increases demanded by consumer brands are justified or not, Muller said. On the other side of the equation are the brands, facing higher costs that are squeezing margins. Beiersdorf CEO Vincent Warnery said on Wednesday that retailers in key markets, including Germany and France, had pushed back strongly in price talks last quarter, not only refusing price increases but asking for price reductions, and pulling products from shelves. Beiersdorf eventually agreed to a 2.6% rise, Warnery said, but delistings of some products by retailers knocked two percentage points off its sales growth in Europe in the second quarter. "There will be a lot of price changes pushed forward by consumer brands, some will be accepted by retailers and some will not," said Bobby Gibbs, a Dallas-based partner at Oliver Wyman who advises retailers and consumer goods firms. Manufacturers will find it easier to push higher prices through on products where there is brand loyalty and fewer strong private label alternatives, Gibbs said. Reuters' global tariff tracker shows at least 102 out of nearly 300 companies monitored by the tracker have announced price hikes in response to the trade war, with about 41 of them in the consumer sector. As well as tariffs, other factors like the cost of capital and labour, and commodity prices in the case of coffee and chocolate, are pushing prices up on certain products, Gibbs said. Trump has said the tariffs counter persistent U.S. trade imbalances and declining U.S. manufacturing power, and that the moves will bring jobs and investment to the nation. More price hikes are planned, particularly in the U.S. Tide detergent maker Procter & Gamble (PG.N), opens new tab last week said it was raising prices on about a quarter of its products in the U.S. by a mid-single-digit percentage as part of efforts to mitigate the cost of higher tariffs on imported goods. That will affect pricing at Walmart (WMT.N), opens new tab, Target (TGT.N), opens new tab, and other stores. As talks heat up, more retailers could pull branded products temporarily as a negotiating tactic, as Ahold's Albert Heijn chain did this year in a dispute over price hikes by coffee roaster JDE Peet's. Dutch brewer Heineken ( opens new tab last week said its beer sales were dented by a price dispute with European retailers. "Many retailers are getting more sophisticated in how they can measure product switching ... so they're willing to be bolder on delistings because they're able to protect sales and margin more than they would have in the past," said Gibbs. In Europe, retailers are joining forces to increase their clout in pricing talks. Carrefour ( opens new tab said last month it had created a new European buying alliance called Concordis, along with rival group Coopérative U, and is in advanced discussions with other European retailers to expand the alliance. Supermarkets are developing more own-brand alternatives to big-name brands. Ahold has introduced 300 new own-brand products this year in its U.S. chains, and sales growth in those has outpaced the rest of the store, it said. Big brands have taken note, with P&G's Chief Financial Officer Andre Schulten saying last week that retailers have been implementing "more aggressive pricing" on own-brand products. "We see some level of pressure to drive trade down because of price promotional behaviour," he said, referring to consumers swapping to lower-priced products, adding the market would remain "volatile and challenging".
Reuters
2 hours ago
- Reuters
Vietnam PM tells central bank to remove cap on credit growth from 2026
HANOI, Aug 7 (Reuters) - Vietnamese Prime Minister Pham Minh Chinh has told the country's central bank to remove a cap on credit growth in the banking system from next year, the government said on Thursday. The central bank should, instead, develop a set of standards for banks to operate in an "efficient and healthy" manner, the government said in a statement. The State Bank of Vietnam has set an annual cap on credit growth in the banking system as a way to control the flow of money into the economy and maintain the system's stability. The cap for this year stands at 16%.
