Giving Turkish Monetary Policy a Break
I still have an addendum to yesterday’s Hurriyet Daily News column, which was also posted here, in the works, but I noticed all my past several posts have been on monetary policy, so here’s my Turkish data wrap-up, for a change, if nothing else:
First, the September trade deficit came in at much higher than expected last week, taking the yearly figure to another record level.
The economists’ forecast error was mainly from imports, which did not differ radically from VATs on imports, so I am not sure what was going on there…
…whereas exports were as well-behaved as usual, meaning they came in exactly as predicted by the Turkish Exporters Association, or TEA, preliminary exports figures.
Speaking of exports, the October TEA figure, released today, is pointing to the continuation of robust exports growth.
There were a couple of other important data releases this morning: First, October Istanbul inflation, by the Istanbul Chamber of Commerce,or ICC, is really pointing to a record-level figure when TurkStat releases the official figures two days from now.
But the correlation between the two series is not that good, so economists usually look at ICC food figures to get a bearing on TurkStat food inflation, as the correlation between these two is marginally better:
In any case, the figures point to a monthly inflation figure in the vicinity of 2.5-3 percent, as most analysts are predicting.
Another important data release of the day was business (and foreign shows/movies) channel CNBC-e’s consumer confidence index, which took a sharp dive:
Finally, October PMI turned out to be rather strong, driven mainly domestic orders, whereas export orders, unsurprisingly given half of Turkey’s exports are to the EU, remained weak.
What is my take on all this data? First, the trade figures show me it is too early to say the adjustment is under way, although it is sure to start next month because of base effects. The economy is also not slowing down as quickly as the Bank envisaged a couple of months ago, as evidenced by the PMIs. But the confidence indices tells us it will, soon enough…
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