Moody’s raises inflation expectations for Turkey

Moody’s on Wednesday raised inflation expectations  for Turkey from 52,1 percent to 68,6 percent in its August update of the “Global Macro Outlook 2022-23 Report”,  saying that inflationary risks in Turkey are on the upside and that inflation will continue to rise if energy and food prices do not decrease.

Moody’s also updated its expectation for growth in Turkey from 3,5 percent to 4,5 percent in the same update. 

"Strong credit impulse, policies supporting upward minimum wage adjustments and loose monetary policy have supported domestic consumption, while demand from trading partners and a weak lira have bolstered exports and tourism recoveries," the report said, adding that the central bank of Turkey decreased its policy interest rate 100 base points despite soaring inflation. 

The agency also updated its prediction for inflation in Turkey to rise from 30 percent to 40 percent. 

Moody’s also decreased its estimation for the growth rate of Turkey from 4 percent to 2 percent in 2023 as it anticipated a slowdown in Turkey’s economy in the coming months. 

Moody’s report noted that global growth has slowed as tighter financial conditions permeated the economy and global economic growth continued to weaken as financial conditions tightened after central banks' moves to reduce inflation.