TL and inflation analysis from the giant US investment bank Goldman: How do local elections affect ‘Dollar/TL’? – Last Minute Economy News
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Goldman Sachs published its latest Turkey report before the local elections to be held on Sunday, March 31.
The report said, “Regardless of the election results, we expect both monetary and fiscal policy to continue and the pressure on the reserves as well as the TL to ease. Since budget revenues have reached their long-term average, we do not expect tax increases similar to last year after the elections, and we think that spending pressures will also decrease.” The expression was used.
“SIGNAL THAT THE POSSIBILITY OF VALUE LOSS IN TL IS LOW”
The report, which also included the year-end inflation forecast, evaluated: “We estimate that inflation will peak in May and from there, with positive base effects, it will begin to decline sharply to 33 percent by the end of the year.”
Regarding the demand for foreign currency, the report states, “There is an increasing demand for foreign currency due to the Turkish people’s thoughts that the TL will lose excessive value after the elections, but the fact that the Central Bank of the Republic of Turkey (CBRT) increased the policy rate by 500 basis points last week indicates that the possibility of such a depreciation is low.” “We think it sends a strong signal.”
“WE ESTIMATE INFLATION WILL RISE TO 68.5 PERCENT”
The report included the prediction that inflation will continue to be high in this period, along with the increasing food and service inflation due to Ramadan coinciding with March this year, and said, “We estimate that inflation will rise to 68.5 percent on an annual basis in March due to the negative base effect.”
The report pointed out that a slowdown was expected in other Consumer Price Index sub-items in response to core goods inflation rising on a monthly basis due to the weakness in the exchange rate, and noted that there was uncertainty on the forecasts due to the difficulty of calculating the total effect of wage increases and Ramadan on inflation in the current inflation environment.
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