Feb 24, 2016 - (Monthly, Million USD) ... (12-Month Cumulative, Billion USD). 25. 30. 35 ... 10/15. 12/15. Portfolio and Short Term**. FDI and Long Term*. CAD ...
THE ECONOMIC OUTLOOK AND MONETARY POLICY
February 24, 2016
Overview: Macroeconomic Outlook and Monetary Policy
•
The favorable developments in the terms of trade and the moderate course of consumer loans contribute to the improvement in the current account balance.
•
Demand from the European Union economies support exports at an increasing pace, despite elevated geopolitical risks in other export markets.
•
Energy price developments affect inflation favorably, while other cost factors limit the improvement in the core indicators.
•
Considering the impact of the uncertainty in global markets and wage developments on inflation expectations and pricing behavior, the tight liquidity stance will be maintained as long as deemed necessary.
2
Outline
1. 2. 3. 4.
Economic Activity External Balance Inflation Monetary and Financial Conditions
3
ECONOMIC ACTIVITY
4
GDP continues to grow at a robust and steady pace. Annual GDP Growth and Contributions (Percentage Points) 20
Change in Inventories Net Exports Final Domestic Demand GDP
15
10
5
0
-5
Source: TURKSTAT.
09/15
06/15
03/15
12/14
09/14
06/14
03/14
12/13
09/13
06/13
03/13
12/12
09/12
06/12
03/12
12/11
09/11
06/11
03/11
12/10
09/10
06/10
03/10
-10
Last Observation: 2015 Q3
5
Confidence indicators display a volatile course. Investment and Employment Prospects
Consumer Confidence Bloomberg HT
(Seasonally Adjusted) Investment Tendency
TURKSTAT-CBRT (rhs)
110
90
Employment Tendency
25
85 100
20 80
90 75 80
15
70 65
10
70 60 5
60 55
Source: Bloomberg HT, TURKSTAT, CBRT.
Last Observation: January 2016 for Bloomberg HT Survey, February 2016 for TURKSTAT-CBRT Survey.
Source: CBRT Business Tendency Survey
01/16
10/15
07/15
04/15
01/15
10/14
07/14
04/14
01/14
10/13
07/13
04/13
01/13
10/12
07/12
04/12
0
01/12
01/16
09/15
05/15
01/15
09/14
05/14
01/14
09/13
05/13
01/13
09/12
05/12
50
01/12
50
Last Observation: February 2016.
6
Recently, industrial production has continued to expand at a moderate pace, while export orders have somewhat weakened. Business Orders (Survey Outcome)
Industrial Production and Capacity Utilization (Seasonally Adjusted) 130
(Last 3 months, Seasonally Adjusted) 78
20
Exports
Domestic
77 15
125 76
10 75
120
74 115
5
73 0
72
Industrial Production
-5
Capacity Utilization (rhs)
71
Source: TURKSTAT, CBRT.
Last Observation: December 2015 for Industrial Production, February 2016 for Capacity Utilization.
Source: CBRT Business Tendency Survey.
01/16
11/15
09/15
07/15
05/15
03/15
01/15
11/14
09/14
07/14
05/14
-10
03/14
01/16
10/15
07/15
04/15
01/15
10/14
07/14
04/14
01/14
10/13
07/13
04/13
01/13
10/12
07/12
04/12
70
01/12
105
01/14
110
Last Observation: February 2016.
7
54
Participation Rate (%)
28
Employment (millions, right axis)
27
52 26 50
Thousands
Employment continues to increase at a steady pace.
15
Unemployment Rate (percent) Non-farm Unemployment Rate (percent)
13
25 24 11
48 23 46
22
21
9
44 20
Source: TURKSTAT, Household Labor Force Survey, CBRT.
09/15
05/15
01/15
09/14
05/14
01/14
09/13
05/13
01/13
09/12
05/12
01/12
09/11
05/11
01/11
09/10
7
05/10
09/15
05/15
01/15
09/14
05/14
01/14
09/13
05/13
01/13
09/12
05/12
01/12
09/11
05/11
01/11
09/10
19
05/10
42
Last Observation: November 2015.
8
EXTERNAL BALANCE
9
Demand from the European Union economies support exports at an increasing pace, …. Exports to European Union (12 months cumulative, billion Euros)
60
55
50
45
40
35
Source: TURKSTAT.
0915
0515
0115
0914
0514
0114
0913
0513
0113
0912
0512
0112
0911
0511
0111
0910
0510
0110
0909
0509
0109
0908
0508
0108
0907
0507
0107
30
Last Observation: : December 2015.
10
…. despite elevated geopolitical risks in other export markets. Exports to Russia
Exports to Iraq
(Monthly, Million USD)
(Monthly, Million USD)
800,0
1400,0
700,0
1200,0
600,0
1000,0
500,0
800,0
400,0 600,0
300,0
200,0
0,0
0,0
0109 0609 1109 0410 0910 0211 0711 1211 0512 1012 0313 0813 0114 0614 1114 0415 0915
100,0
Source: TURKSTAT
0109 0609 1109 0410 0910 0211 0711 1211 0512 1012 0313 0813 0114 0614 1114 0415 0915
400,0
200,0
Last Observation: December 2015.
11
The favorable impact of lower oil prices on the current account balance is expected to continue in the forthcoming period. Energy Imports (12-Month Cumulative, Billion USD) 65 60 55 50 45 40 35 30
Source: TURKSTAT
1115
0915
0715
0515
0315
0115
1114
0914
0714
0514
0314
0114
1113
0913
0713
0513
0313
0113
1112
0912
0712
0512
0312
0112
1111
0911
0711
0511
0311
0111
1110
0910
0710
0510
0310
0110
25
Last Observation: December 2015.
12
The improvement in the cumulative current account balance is expected to continue in the coming periods. Current Account Balance (CAB) (12-Month Cumulative, Billion USD) 0 -10
CAD
-20
CAD (Excluding gold)
-30 -40 -50 -60
Source: CBRT.
12/15
10/15
08/15
06/15
04/15
02/15
12/14
10/14
08/14
06/14
04/14
02/14
12/13
10/13
08/13
06/13
04/13
02/13
12/12
10/12
08/12
06/12
04/12
02/12
12/11
10/11
08/11
06/11
04/11
02/11
12/10
-80
10/10
-70
Last Observation: December 2015.
13
Current account deficit is financed through long term borrowing and FDI flows. (12-Months Cumulative, Billion USD) Portfolio and Short Term**
FDI and Long Term*
CAD
85 75 65 55 45 35
25 15 5
Source: CBRT.
12/15
10/15
08/15
06/15
04/15
02/15
10/14 12/14
08/14
06/14
04/14
02/14
12/13
10/13
08/13
04/13 06/13
02/13
12/12
10/12
08/12
06/12
04/12
02/12
10/11 12/11
08/11
06/11
04/11
02/11
12/10
10/10
-5
*Long term inflows are sum of banking and real sectors’ long term net credit and bonds issued by banks and the Treasury. Short term capital movements are sum of banking and real sectors' short term net credit and deposits in banks. Last Observation: December 2015.
14
Maturity extension in the noncore FX liabilities of financial institutions has continued recently. Maturity Breakdown of Non-Core FX Liabilities (Percent Share) 60 55 50
Up to 1-Year
45 40
Longer than 3-Years
35 30 Required Reserve Measures
25
Source: CBRT
11/15
10/15
09/15
08/15
07/15
06/15
05/15
04/15
03/15
02/15
01/15
12/14
11/14
10/14
09/14
08/14
07/14
06/14
05/14
04/14
03/14
02/14
01/14
20
Last Observation: December 04, 2015.
15
INFLATION
16
Inflation indicators have increased in recent months due to lagged impact of exchange rate developments and elevated food prices. (Annual Percentage Change) 13 12
CPI
H
I
11 10 9 8 7 6 5 4
Source: TURKSTAT.
12/15
10/15
08/15
06/15
04/15
02/15
12/14
10/14
08/14
06/14
04/14
02/14
12/13
10/13
08/13
06/13
04/13
02/13
12/12
10/12
08/12
06/12
04/12
02/12
12/11
10/11
08/11
3
Last Observation: January 2016.
17
The decline in import prices partly offsets the pass-through effect from exchange rates. Import Price Index (2010=100)
190
Import Prices (in USD) (2010=100) 170
Import Prices (in TL)
150
130
110
90
70
0103 0503 0903 0104 0504 0904 0105 0505 0905 0106 0506 0906 0107 0507 0907 0108 0508 0908 0109 0509 0909 0110 0510 0910 0111 0511 0911 0112 0512 0912 0113 0513 0913 0114 0514 0914 0115 0515 0915
50
Source: TURKSTAT, CBRT.
Last Observation: December 2015.
18
Medium term inflation expectations displayed an upward movement during the past year. Inflation Expectations
8,5
(Percent) 8,0 12 months
7,5
7,0
6,5
24 months
6,0
5,5
Source: CBRT.
02/16
12/15
10/15
08/15
06/15
04/15
02/15
12/14
10/14
08/14
06/14
04/14
02/14
12/13
10/13
08/13
06/13
04/13
02/13
12/12
10/12
08/12
06/12
04/12
02/12
12/11
10/11
08/11
5,0
Last Observation: February 2016.
19
Monetary and Financial Conditions
20
Portfolio flows to emerging economies remain weak. Equity and Bond Flows to Emerging Markets (Billion USD, 4-Week Moving Sum) 40 35 30 25 20 15 10 5 0 -5 -10 -15 -20 -25 -30 -35 -40
Bonds
Source: EPFR.
01/16
11/15
09/15
07/15
05/15
03/15
01/15
11/14
09/14
07/14
05/14
03/14
01/14
11/13
09/13
07/13
05/13
03/13
01/13
11/12
09/12
07/12
05/12
03/12
01/12
Equities
Last Observation: February 10, 2016.
21
Risk premiums continue to be volatile across emerging economies, ... Regional EMBI Indices (Basis Points) 800
800
EMBI Europe
EMBI Turkey
EMBI Latin America
EMBI Asia
Source: Bloomberg.
02/16
12/15
10/15
08/15
06/15
04/15
02/15
12/14
10/14
08/14
06/14
04/14
02/14
12/13
10/13
08/13
06/13
100
04/13
100
02/13
200
12/12
200
10/12
300
08/12
300
06/12
400
04/12
400
02/12
500
12/11
500
10/11
600
08/11
600
06/11
700
04/11
700
Last Observation: February 17, 2016.
22
… as well as exchange rates. Implied FX volatility (1 month, Percent) 35
35
30
30
Turkey
Emerging Economies*
25
25
Source: Bloomberg
02/16
12/15
10/15
08/15
06/15
04/15
02/15
12/14
10/14
08/14
06/14
04/14
02/14
12/13
10/13
08/13
06/13
04/13
02/13
12/12
10/12
08/12
0
06/12
0
04/12
5
02/12
5
12/11
10
10/11
10
08/11
15
06/11
15
04/11
20
02/11
20
*Emerging market currencies include Brazil, Chile, Colombia, Mexico, Poland, Czech Republic, South Africa, Indonesia, Romania against USD. Last Observation: February 17, 2016.
23
The decline in global volatility observed at the end of 2015 has not proved persistent. VIX and MOVE Indices (5-Day Average)
40
130
VIX (Percent) MOVE (Basis Points, Right Axis)
35
115
Source: CBRT
02/16
01/16
12/15
11/15
10/15
40
09/15
10
08/15
55
07/15
15
06/15
70
05/15
20
04/15
85
03/15
25
02/15
100
01/15
30
*The shaded area indicates the period after Fed rate hike. Last Observation: February 17, 2016.
24
Flexible FX Sale Auctions
•
FX demand is expected to decline significantly in the upcoming periods due to improvement in the current account deficit and the fall in energy prices.
•
Meanwhile, FX liquidity tools will continue to be used to support the value of the Turkish lira.
•
In this respect, flexible FX sales auctions will continue to supply FX liquidity at amounts deemed necessary.
25
The tight monetary policy stance will be maintained as long as deemed necessary. Interest Rates (Percent) 13
Interest Rate Corridor
CBRT Average Fund Rate
BIST Interbank Market O/N Rates
One-Week Repo Rate
13 12
11
11
10
10
9
9
8
8
7
7
6
6
5
5
4
4
3
3
05/13 06/13 07/13 08/13 09/13 10/13 11/13 12/13 01/14 02/14 03/14 04/14 05/14 06/14 07/14 08/14 09/14 10/14 11/14 12/14 01/15 02/15 03/15 04/15 05/15 06/15 07/15 08/15 09/15 10/15 11/15 12/15 01/16 02/16
12
Source: CBRT
Last Observation: February 17, 2016.
26
Yield curve remains flat. Cross Currency Swap Rates (Percent)
14
5-Year
3-Month
14
12
12
10
10
8
8
6
6
4
5 year-3 month spread
4
0
-2
-2
Source: CBRT.
02/15 04/15 06/15 08/15 10/15 12/15 02/16
0
02/13 04/13 06/13 08/13 10/13 12/13 02/14 04/14 06/14 08/14 10/14 12/14
2
04/11 06/11 08/11 10/11 12/11 02/12 04/12 06/12 08/12 10/12 12/12
2
Last Observation: February 17, 2016.
27
Consumer loan rates have increased in recent months as a response to tighter financial conditions. Interest Rates on Consumer Loans (Percent) 21
19
17 Other 15 Automobile 13
Housing 11
9
Source: CBRT.
01/16
10/15
07/15
04/15
01/15
10/14
07/14
04/14
01/14
10/13
07/13
04/13
01/13
10/12
07/12
04/12
01/12
10/11
07/11
04/11
01/11
10/10
07/10
04/10
01/10
7
Last Observation: February 05, 2016.
28
Annual loan growth continues to decelerate in response to tight monetary and financial conditions. Total Loan Growth Rate (Year on Year Change, Percent) 40
35
30
25
20
15
Source: CBRT.
01/16
11/15
09/15
07/15
05/15
03/15
01/15
11/14
09/14
07/14
05/14
03/14
01/14
11/13
09/13
07/13
05/13
03/13
01/13
11/12
09/12
07/12
05/12
03/12
01/12
11/11
09/11
07/11
05/11
03/11
01/11
10
Last Observation: February 12, 2016. Total loan is inclusive of all types of banks (deposit banks, participation banks, and development/investment banks) and credit cards. Adjusted for exchange rate.
29
Commercial loans grow at a faster pace than consumer loans, contributing to price stability, financial stability, and the rebalancing process. Loan Growth Rates
50
50
(Annual Percentage Change)
45
45
40
40
35
35
30
30
Commercial
25
25
20
20
15
15
Consumer
10
10
Source: CBRT.
0116
1115
0915
0715
0515
0315
0115
1114
0914
0714
0514
0314
0114
1113
0913
0713
0513
0313
0113
1112
0912
0712
0512
0312
0112
1111
0911
0711
0511
0311
0111
1110
0910
0710
0
0510
0
0310
5
0110
5
Last Observation: February 12, 2016. Inclusive of loans extended by all types of banks (deposit banks, Participation banks, and development/investment banks). FX adjusted.
30
Overview: Macroeconomic Outlook and Monetary Policy
•
The favorable developments in the terms of trade and the moderate course of consumer loans contribute to the improvement in the current account balance.
•
Demand from the European Union economies support exports at an increasing pace, despite elevated geopolitical risks in other export markets.
•
Energy price developments affect inflation favorably, while other cost factors limit the improvement in the core indicators.
•
Considering the impact of the uncertainty in global markets and wage developments on inflation expectations and pricing behavior, the tight liquidity stance will be maintained as long as deemed necessary.
31
THE ECONOMIC OUTLOOK AND MONETARY POLICY
February 24, 2016
