Turkey: Monthly outlook on economy in October 2011
The agreement reached upon supporting the rescue fund at EU Leaders Summit, initially had positive reflections in the markets and the risk taking appetite improved. Indeed, global stock markets displayed a benign outlook following the announcement of the plan.
On the other hand, as the details of the plan become clearer and the results of implementations are seen in the coming period, the net effects of these decisions on markets would be seen. In fact, Greece’s decision to hold a referendum on the rescue package, which includes new fiscal measures and a series of structural reforms to be implemented by the government, resulted in resurgence of the risk perception in the international markets.
In October, the Medium Term Program (MTP) covering the 2012–2014 years was announced by the Turkish government. The MTP which is covering the 2011 year-end economic indicators realization estimates and the macroeconomic picture of Turkey in the coming three years was prepared under the assumption that there will not be a second dip in global economy although global growth will follow a weak course.
In addition to the developments in exchange rates, the tax adjustments and administered price hikes, which put significant upward pressure on inflation, resulted in a change in CBRT’s policy mix. It was seen that the announcements made and decisions taken by the Central Bank during October pointed out that the CBRT, which has been stressing the importance of “financial stability” due to the rise in current account deficit since late 2010, is now focused more on “price stability”
27.11.2011
SOURCE: TURKIYE IS BANKASI
