Mid-2023 inflation in Turkey to be in range of 35% - 43% - analysis
The flat course of Turkish Lira and the lowering of inflation may support the government's election bid in next year's presidential elections, an analysis by Reuters said. However, keeping the unemployment in check which already edged up to 10.2% in October, will be one of the main challenges due to the slowing growth, according to the analysis.
Officials expect the lira to remain steady well into 2023, and annual inflation is expected to drop to about 40% by election time, from 85% currently.
JPMorgan analysts expect inflation to hit 40% by mid-2023 and then rebound largely due to pre-vote fiscal stimulus. They said inflation "has had a massive impact on real wages", adding they will further hinge on an expected hike to the minimum wage.
The government forecasts inflation will near 20% at the end of 2023.
Four analysts surveyed by Reuters forecast May inflation would be in a range of 35% to 43% unless there is a fresh lira depreciation.
However, economic growth is also expected to keep cooling to below trend levels ahead of presidential and parliamentary elections to be held in May or June, which would be a reverse effect for President Erdogan’s electoral campaign.
Adding to employment pressures, a hefty hike in administered wages could lead to layoffs early next year, while economic growth is starting to ease after an annual expansion of 3.9% in the third quarter, Reuters said.