Turkey's central bank revises upwards inflation forecast

By Azernews

By Kamila Aliyeva

The Central Bank of Turkey has increased inflation forecast for the country from 6.5 percent to 8 percent for 2017.

The central bank expects the inflation rate in 2018 at 6 percent, and in 2019 - at the level of 5 percent, Trend reported.

The Bank also increased its forecast for the average oil price in 2017 from $54 to $57 per barrel, and in 2018 - up to $58.

The projection of a decline in inflation from 8 percent by end-2017 to 6 percent by end-2018 is based on an outlook where cumulative exchange rate effects diminish and economic activity remains moderate.

The central bank maintained its key policy rates unchanged, but said that the recent depreciation of the lira's exchange rate along with higher oil prices creates upside risks on the inflation prospects.

Earlier in October 2016, the Central Bank raised its inflation forecast for 2017, explaining it by increasing pressure from the depreciation of the Turkish Lira.

Along with many other emerging market currencies, Turkey's lira has fallen since the November election of Donald Trump as U.S. President due to the fears that global trade will be affected.

Meanwhile, the Turkish Statistics Institute reported that the volume of Turkey's foreign trade decreased by 2.8 percent in 2016, compared with the previous year, reaching $341.2 billion.

Last year, Turkey exported goods worth $142.6 billion, while imports amounted to $198.6 billion.

The leader in the Turkish export is Germany, which imported goods worth $14 billion last year. Germany is followed by the UK and Iraq, whose imported goods amount to $11.6 and $7.6 billion respectively.

The greatest decline was observed in the export of goods to Russia. It decreased by 51.7 percent and accounted for $1.733 billion.

Leading position in the Turkish import is taken by China, which exported goods worth $25.4 billion to Turkey in 2016. In the past year, Turkey has imported goods from Germany and Russia in the amount of $21.4 and $15.1 billion respectively.

In 2015, the level of Turkey's foreign trade was $351 billion.