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Turkish economic confidence tips towards ‘optimistic’ outlook

REUTERS/Osman Orsal
Turkey’s central bank data show FX reserves dropped by $4bn to $125.6bn in the week after the earthquake

Turkey’s economic confidence index rose 1.3 percent month-on-month in January to 99.3 points, nearly tipping toward an optimistic outlook, data from the Turkish Statistical Institute showed on Monday.

The index, which points to an optimistic outlook when above 100 and pessimistic when below, hit a record low in 2020 before recovering as coronavirus measures were eased.

The lira has stabilised since about August and inflation is easing from a 24-year high, though the annual rate was still well above a five percent official target at 64 percent last month.

Earlier, Turkey’s central bank stuck to its forecasts for a sharp drop in inflation, saying the increasing predictability of the lira’s exchange rate plus financing support meant there was no longer the basis for large price rises.

Presenting a quarterly economic report, the bank’s governor Sahap Kavcioglu stood by previous year-end annual inflation forecasts for 2023 and 2024 of 22.3 percent and 8.8 percent, respectively.

President Tayyip Erdogan has signalled that Turkey will hold elections on May 14, a month earlier than he had earlier flagged, setting the clock ticking on perhaps the most consequential vote in the century-long history of the republic.

Polls show the parliamentary and presidential elections will be tight, with an opposition alliance promising to roll back the country’s current unorthodox economic policies.