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)||-1.0||-1.1||-1.0||-1.1||-1.5|
5 years of economic forecasts for more than 30 economic indicators.
|Bond Yield||16.54||-0.09 %||Jul 11|
|Exchange Rate||5.67||-0.85 %||Jul 11|
|Stock Market||99,406||1.41 %||Jul 11|
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July 23, 2019
Sentiment among Turkish consumers dropped to a near-record low in July, with the consumer confidence index falling from 57.6 in June to 56.5; this marked the second lowest reading since the survey began in 2004.
July 12, 2019
Turkish industrial production fell 1.3% year-on-year in May, improving from the revised 3.8% drop in April (previously reported: -4.0% year-on-year); annual average industrial output contracted 3.1% in May, down from the 2.5% fall in April.
July 11, 2019
Turkey posted its first current account surplus in six months in May, as the balance swung from a USD 1.3 billion deficit in April to a USD 151 million surplus.
July 3, 2019
Consumer prices were largely unchanged from the prior month in June.
July 1, 2019
The Istanbul Chamber of Industry and IHS Markit’s manufacturing Purchasing Managers’ Index (PMI) rose to 47.9 in June from 45.3 in May; while business conditions in the sector deteriorated for the 15th month running, they did so at the softest pace since July 2018.