Newsletters & Press



January 2022

After four months of consecutive declines, the Central Bank of Turkey has decided to keep its main interest rate unchanged at 14%, a decision expected by the markets after a turbulent end to 2021 for the Turkish currency and consumers. Thus, the Central Bank expects a slowdown in inflation thanks to a favorable base effect coupled with the stability measures undertaken by the Government. Indeed, at the end of December, the President announced the creation of a savings mechanism to link the value of certain bank deposits in Turkish lira to the dollar. This emergency measure, intended to encourage the Turks to invest or convert their savings into Turkish lira, was followed by a sudden appreciation of the national currency.

Monetary policy and the inflationary spiral will be the major economic challenges of 2022. The country's monetary policy relies on low interest rates to boost exports, credit and growth, pillars of Turkish economic activity. Since September, interest rates have been lowered by 500 basis points, leading to a historic drop in the Turkish lira, already weakened for 3 years, which is now at its lowest level, which has led to high inflation. The latter reached 36.08% over one year. This figure, a record since September 2002, greatly exceeds government forecasts. Some economists expect inflation to rise further in 2022, due in particular to soaring energy prices, foreign currency imports and the increase in the minimum wage from 2,825.90 TL net to 4,253.40 TL net on January 1, 2022, i.e. a salary revalued by 50.4%.

The depreciation of the Turkish lira, which lost almost half of its value in 2021, translated into cheaper exports up 32.9% year on year to $225.37 billion, a record . The automobile continued to be the leading export item for the 16th consecutive year. Currency depreciation has also had a positive impact on mergers and acquisitions transactions, which recorded a record $14 billion this year, 28% of which were carried out directly by foreign investors.

Read the Newsletter (in French) in PDF format