Newsletters & Press

July 2023

Continuing its policy of monetary tightening to initiate disinflation, the Turkish Central Bank raised its key rates by 2.5 points for the second time in a row; the interest rate now stand at 17.5%. This is the second increase in Turkish rates in two years. The Central Bank had already raised its key rate from 8.5% to 15% at the end of June.

Inflation fell below 40% year on year in June, its lowest level in eighteen months, but is expected to rebound in the coming months, supported by rising wages (+34%) and a set of fiscal measures which include the increase in VAT and an increase in corporate tax. The fall of the Turkish lira, which has lost more than a quarter of its value against the dollar since the end of May (Thursday, July 27, it was trading above 27 turkish lira to one dollar) should also support a possible rise in prices.

Alongside these economic measures, the Turkish President's tour of several Gulf countries marked the news in July. The President was accompanied by a large ministerial delegation, including the Minister of Foreign Affairs, the Minister of Defense, as well as some 200 businessmen. This series of visits to Saudi Arabia, the United Arab Emirates and Qatar resulted in the signing of agreements estimated by some analysts at USD 100 billion.

This tour comes as Turkey pursues a very active foreign policy. It has given its consent to Sweden's membership of NATO and supports that of Ukraine. Ankara is also talking with Moscow about the renewal of the agreement on Ukrainian grain exports.

In terms of investments, Turkey remains a country particularly popular for foreign investors; members of the International Investors Association of Turkey (YASED International Investors Association) are planning USD 7.1 billion of direct investment in the country over the next 6 months and this enthusiasm has been particularly evident this month with the investment decisions made by TotalEnergies, DHL Group, and the automaker Skywell.

Read the newsletter (in French) in PDF format