Inflation forecast from ITO President

A statement regarding year-end inflation expectations has come from the business world.

Istanbul Chamber of Commerce (ITO) President Şekib Avdagiç, recalling that the Central Bank of the Republic of Turkey (TCMB) announced its year-end inflation expectation as 36 percent, stated: "As the Istanbul business world, we project that we will close this year with inflation in the 43-44 percent range. However, for exports not to face difficulties and for imports not to become attractive, the correlation between the exchange rate and inflation must not be broken. Suppressing inflation by suppressing the exchange rate may have some short-term benefits, but this will be a factor that increases imports and suppresses exports. This will negatively affect our foreign trade deficit, which we are always working on."

Regarding the exchange rate, Avdagiç said, "In the first quarter, the dollar exchange rate increased by 9 percent, while inflation rose by over 14.3 percent. There is a 5.3-point difference in the first 3 months."

DEVELOPMENT IN CREDIT RISK PREMIUM

Avdagiç continued by stating that "the decline of Turkey's 5-year credit risk premium (CDS) to the 300-point level is an important result of the economic management's efforts."

'ECONOMIC MANAGEMENT'S STEPS HAVE BEGUN TO YIELD RESULTS'

Noting that "the steps taken by the economic management have begun to yield positive results," the ITO President said, "This is gratifying. For the business world, an element as important as the CDS is the banks' syndicated loans. There is a correlation between the two. When we look at the latest bank syndications, we see that they are borrowing at Euribor+2.25 percent. It is necessary to monitor the syndication costs of banks."

"BANK LOAN COSTS NEED TO BE BROUGHT DOWN"

Stating that bank loan costs are high, ITO President Avdagiç continued his words as follows:

"In an environment where inflation is this high, it is a market reality for credit costs to be positioned above inflation. Credit usage is primarily on the agenda to continue daily commercial activities. Our expectation is for inflation to fall to a reasonable level, and consequently, for interest rates and credit costs to reach a more appropriate point. Bringing down credit costs will be in harmony with bringing down inflation."

News Source: 12punto