Page 17 - Turkey Outlook 2025

recession with the 3Q official GDP release.
On January 3, TUIK will release official inflation for December. A 2% m/m release would mean 45.8% as official annual inflation at end-2024.
Eight meetings, 20pp of cuts in 2025?
The MPC will hold a total of eight meetings in 2025. If it delivers 250bp cuts at each meeting, its policy rate will decline by 20pp to 27.5%.
As things stand, given that the upper boundary of its forecast range for end-2025 official inflation stands at 26% y/y, the journey to that target could be considered to be under way.
However, if the TUIK’s inflation releases overshoot the central bank’s forecast range, the MPC may remain on hold at one or two meetings.
5.0 Real Economy
5.1 Retail
In Turkey, child hunger is a particular worry that is building up to be a huge problem in the decades ahead. The Erdogan regime ignores calls and campaigns that urge the government to provide at least one meal a day at lunchtime for all children at schools.
Attractive market
Turkey has a population of about 100mn when all migrants, documented and undocumented, are included. Around 20-30% of the population are wealthy.
That means that the population of wealthy residents is bigger than the populations boasted by many countries in Europe.
The rest of Turkey’s people are immersed in serious economic difficulties. But the number of wealthy individuals and families means that Turkey remains an attractive market.
How to stop the rich?
These 20-30mn people proved a serious difficulty in 2024 when it came to securing the desired effects from the monetary tightening process.
During the negative real rates era, they kept their money in FX/Gold, stocks or real estate. They turned to money market funds and deposits last year to benefit from interest rates that jumped to about 50%.
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