Turkey

Expectations of economic growth in spite of budget deficit

Turkey’s Istanbul Index rose to 30 by 2.11% due to the tight monetary policy that was imposed by the Turkish Central Bank in a bid to double the interest rate by 10%. The rise of interest rates that the Turkish Central Bank imposed, contributed to the rise in European stock market. FTSEurofirst index increased by 0.8%, closing at 1308.29 points, and Euro Stoxx 50 (Europe’s leading Bluechip index for the Euro zone) increased by 1%, reaching 3068.96 points. Besides, the decline in the Turkish lira continues during the current year 2014, recording losses that exceeded 20% last year, as the Turkish currency decreased by 5% against the US dollar during last January. Turkish Central Bank has decided to raise the lending rate for one night from 7.75% to 12%, the Repo rate for a week from 4.5% to 10%, and the lending interest rate for one night, from 3.5% to 8%. This sharp rise of interest rates was a result of the bank’s failure to stop the deterioration of the currency, through pumping foreign currency into the market from cash reserves. The total value of Turkish exports in 2013 was $151 billion and 869 million, while that of imports was $251 billion and 651 million. The value of Turkey’s exports for December 2013 increased by 4.9%, compared to the same month of 2012, and amounted to $13 billion and 220 million, while the value of imports was estimated by $23 billion and 137 million, with an increase of 16.7%. Turkey’s exports to the EU also increased by 6.6%. Indeed, Germany tops the list of countries exporting to Turkey.