Fiscal Balance in Turkey
Turkey - Fiscal Balance
Government presents more restrictive 2019 budget
In late October, Treasury and Finance Minister Berat Albayrak presented the draft 2019 budget to the parliament’s Planning and Budget Commission, ahead of a likely submission to parliament in December. The budget sets out in more detail the tighter fiscal stance previously signaled in September’s New Economic Plan and, if implemented, should help rebalance the economy and avoid further overheating. However, budgeted spending could well be exceeded, which could in turn weaken investor confidence in the government’s commitment to fiscal prudence and put downward pressure on the lira.
Expenditure is seen at TRY 961 billion, which is up roughly 17% from the estimate for 2018. However, given still-elevated inflation next year, expenditure in real terms is thus set to be fairly flat. Looking at the key categories, spending on wages and transfer payments are set for notable above-inflation increases, with the latter likely due in part to an expected rise in unemployment. The government has instead opted to make savings in the capital budget, which is projected to shrink sharply.
Revenues are seen at TRY 880 billion, also up around 17% year-on-year. Consequently, the government foresees a fiscal deficit of 1.8% of GDP in 2019, unchanged from the projection made in the New Economic Plan. If implemented, the draft budget should help support the lira, which lost significant value earlier this year—partly due to investors’ concerns over excessive fiscal stimulus. However, spending overruns are a significant possibility, particularly given local elections early next year and the fact that 2018 expenditure is expected to markedly overshoot the initial budgeted estimate.
Turkey - Fiscal Balance Data
|Fiscal Balance (% of GDP)||-1.1||-0.9||-1.0||-1.6||-2.0|
5 years of economic forecasts for more than 30 economic indicators.
|Bond Yield||12.00||-0.09 %||Dec 31|
|Exchange Rate||5.95||-0.85 %||Jan 01|
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February 20, 2020
Consumer sentiment in Turkey fell to 57.3 in February, a four-month low, from 58.8 in January.
February 19, 2020
At its 19 February Monetary Policy Committee (MPC) meeting, Turkey’s Central Bank extended its easing cycle by cutting the one-week repo rate for the sixth time in a row.
February 14, 2020
Turkey’s current account deficit widened markedly from USD 1.1 billion in December 2018 to USD 2.8 billion in December 2019 (November: USD -0.4 billion, previously reported: USD -0.5 billion).
February 13, 2020
Industrial production grew 8.6% year-on-year on a calendar-adjusted basis in December, up from November’s revised 4.9% rise (previously reported: +5.1% year-on-year) rise and marking a near-two-year high and beating market expectations of a 7.0% increase.
February 3, 2020
Business conditions in the Turkish manufacturing sector improved for the first time in nearly two years in January, with the Istanbul Chamber of Industry Turkey Manufacturing Purchasing Managers’ Index (PMI) rising to 51.3 in January from 49.5 in December.