JPMorgan Revises Dollar/TL Forecast, Upgrades Turkish Bonds to ‘Overweight’

Revised Projections Reflect Increased Confidence in Turkiye’s Economic Stabilization Efforts

JPMorgan has adjusted its year-end forecast for the dollar/Turkish lira (TL) exchange rate from 36 to 35.5, citing growing confidence that Turkiye’s policy rate and inflation are nearing their peaks. In a show of increased optimism, the bank also upgraded its investment recommendation for Turkish government bonds to ‘Overweight’.

In their latest report, JPMorgan economists project that Turkiye’s inflation will drop to 25% by the end of 2025. This outlook aligns with their expectation of a cooling Turkish economy, anticipated to enter a negative output gap for the first time since early 2021. The report highlights that, despite an overheated economy with a 1.2% output gap in the first half of the year driven by wage hikes and earthquake-related expenditures, coordinated monetary and fiscal policy tightening will likely lead to an economic cooldown starting in the third quarter.

Fatih Akçelik, a leading economist at JPMorgan, notes that this anticipated cooling will aid in reducing inflation and improving the current account balance in the latter half of 2024 and into 2025. The revised forecast and strategic recommendations underscore JPMorgan’s cautious optimism about Turkiye’s economic trajectory amidst ongoing fiscal adjustments.

Source: Bloomberght / Prepared by Irem Yildiz

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button