From now on, expect the unexpected…

Starting off to high inflation rates again, it appears like the new week will be full of political-diplomatic tensions.

There was no expectation that inflation might drop to single digits. According to CBRT’s Survey of Expectations participants, however, inflation will touch single digits over the next 12 to 24 months. This is good news indeed.

The bad news is that it is obviously not possible for the Government to achieve the goal of “5%” set forth in the Medium-Term Plan over the upcoming two years. So, my advice to them would be that to replace the “price stability goal” in the Central Bank law & regulations with the “financial stability goal”.

During a meeting I attended yesterday, I delivered a presentation on 2018 expectations where I basically told this: “2018 will be tough”. Turkish economy will be greatly affected by domestic and foreign affairs, rather than economic parameters. Receivables risk is just too great. There’s a possibility that exchange rates might begin a sharp ascent. Even if they drop back, base will be fixed at higher levels.

We should also get ready for potential fluctuations that might arise from US-Iran sanctions trial. I don’t expect they would bring a direct impact on the trade, yet, they can always cause a financial bottleneck. By the way, the prospect of early general election will continue to increase in 2018 even though there’s assuring talk that “There will not be an early election”.

“Expect the unexpected at the most unexpected time” It looks like this is the motto we should all adopt for 2018.