Skip to content Skip to Search
Skip navigation

Turkish central bank nearly doubles inflation forecast

  • Inflation seen peaking around 70 percent
  • Prices soared after currency crisis, energy price surge
  • Erdogan requested rate cuts last year
  • Central bank pursuing ‘liraisation’ strategy

Turkey’s annual inflation will peak at around 70 percent by June before declining to near 43 percent by year-end, the central bank has forecast.

The central bank slashed its policy rate by 500 basis points to 14 percent last year as part of President Tayyip Erdogan’s new economic plan.

The cuts sparked a currency crisis that sent inflation to 61 percent in March amid a rise in global energy costs due to Russia’s invasion of Ukraine.

Disinflation will begin in coming months “thanks to a gradual decrease in supply-demand mismatches and disruptions in supply chains, in addition to the results of the steps taken for price stability,” governor Sahap Kavcioglu said.

The central bank has focused on wiping out Turkey’s current account deficits by boosting exports and increasing the share of the lira in the financial system, which it says will help establish price stability.

But the global rise in commodities prices due to the Ukraine conflict has made that target more difficult to achieve.

Export-driven growth and current account balance are important for price stability, Kavcioglu said, adding that Turkey’s economy is seen expanding 7 percent in the first quarter this year.

He said tourism is expected to increase this year, despite the war in Ukraine. Russia and Ukraine are two of the biggest sources of visitors. Bookings from the European Union and the Middle East have increased sharply, Kavcioglu said.

Kavcioglu also said one of the “essential elements” of the bank’s strategy would now be increasing the share of lira in the financial system, as part of a “liraisation” strategy to achieve price stability. The ultimate target is to build a financial structure in which all “economic units” use only the local currency in decision making.

Latest articles

Adnoc sought advice from investment banks on buying a significant stake in BP, a media report said

UAE’s Adnoc explored acquiring BP

Abu Dhabi National Oil Company (Adnoc) explored the possibility of acquiring British oil major BP but abandoned the plan as it did not fit into its strategic growth objectives, a media report said.  The talks did not advance beyond the initial stages, Reuters reported, citing informed sources.  The UAE state oil company also sought advice […]

Nature, Undersea cables account for as much as 90 percent of Europe-Asia telecommunications, Water

Iraq and Kuwait team up for European telecom corridor

Iraq’s Informatics and Telecommunication Public Company, a division of the Ministry of Communications, has signed an agreement with Kuwait’s Zajil Telecom to create a telecommunications corridor from the Gulf region to Europe, transiting through Iraq and Turkey. The new route will pass through Iraqi sea and land ports. Iraq’s minister of communications Hayam Al-Yasiri said […]

An artist's impression of part of the Diriyah Square development

Diriyah Square planned for historic Riyadh district

A public space featuring 400 retail outlets and 100 restaurants and cafes is planned for the historic Riyadh district of Diriyah. Diriyah Square will be announced next week at the World Retail Congress in Paris and aims to attract a combination of international retail brands and local artisans.  Diriyah Gate Development Authority group CEO Jerry […]

Turkish crude steel output rose 25% year on year to 3.2 million tonnes in January

Turkish steel in the black but EU rules rankle

Turkey’s steel industry has rebounded strongly from a weak 2023, despite facing new emissions standards and competition for important markets.  Crude steel output rose 25 percent year on year to 3.2 million tonnes in January, with domestic consumption of finished steel reaching 3.5 million tonnes, a 20 percent increase.  Exports were also up, increasing 23 […]