The Central Bank of Türkiye (TCMB) released its March Market Participants Survey, revealing improvements in year-end inflation and exchange rate expectations. The latest survey shows that the year-end inflation forecast dropped from 28.30% to 28.04%, while the USD/TRY exchange rate expectation declined from 42.88 to 42.79. Additionally, expectations for the policy interest rate three months ahead indicate a decrease to 37.70%.

The ongoing monetary tightening policy has accelerated positive market expectations, contributing to a downward trend in inflation and interest rates. Conducted with 68 participants from the real and financial sectors, the March survey indicates that markets adjusted their year-end inflation and exchange rate forecasts downward.

Year-End USD/TRY Forecast at 42.79

• Year-end USD/TRY expectation: Decreased from 42.8869 to 42.7907.
• 12-month USD/TRY forecast: Increased from 43.9612 to 44.4165.
• Current account deficit expectation for 2025: $24.5 billion.
• Year-end current account deficit forecast: Rose from $18.8 billion to $19.4 billion.

GDP Growth Expectations Rise to 3.1%

• Türkiye’s GDP growth forecast for 2024 increased to 3.1%, while 2025 projections were raised to 4%.
• The TCMB’s policy interest rate expectation for March remained at 42.50%, but the three-month forecast dropped to 37.70%.
• 12-month interest rate projection: Fell from 28.92% to 27.60%.

Current Account Deficit Expected at $22.1 Billion for 2025

Meanwhile, Anadolu Agency’s (AA) survey regarding the “January 2025 Balance of Payments Data” (to be announced by TCMB on March 12) shows that economists expect a $3.23 billion current account deficit for January. Forecasts for the period ranged between $2.37 billion and $4.50 billion.

For 2025, economists estimate the total current account deficit to be $22.19 billion, with projections varying between $18 billion and $28 billion. In December 2024, Türkiye recorded a $4.65 billion current account deficit, bringing the annualized deficit to $9.97 billion.

Gold Leads as the Best-Performing Investment, Borsa İstanbul Declines

The Turkish Statistical Institute (TÜİK) released February’s real return rates for financial investment instruments. The highest monthly real return was seen in bullion gold, which provided a return of:

• 7.92% when adjusted for Domestic Producer Price Index (Yİ-ÜFE),
• 7.76% when adjusted for Consumer Price Index (TÜFE).

Other investment performances (adjusted for Yİ-ÜFE):
✔️ Deposit interest (gross): +1.16%
✔️ Government Domestic Debt Securities (DİBS): +0.63%
✔️ Euro: +0.26%
❌ USD: -0.29%
❌ BIST 100 Index: -4.18%

Annual Performance:

• Gold remained the best-performing investment with 32.34% real return (Yİ-ÜFE adjusted) and 19.17% (TÜFE adjusted).
• Deposits (gross): +8.31% (Yİ-ÜFE adjusted), +2.47% (TÜFE adjusted).
• BIST 100 Index fell by 14.18% (Yİ-ÜFE) and 22.73% (TÜFE).

As Türkiye’s monetary policy tightens and markets adjust expectations, the latest data signals cautious optimism for inflation, exchange rates, and economic growth in 2025.

Source: Patronlar Dünyası/ Prepared by: İlayda Gök