FKB Economic Outlook Survey: December Inflation Expectation at 3.63%
The Financial Institutions Association (FKB), which operates to grow the Turkish economy with its non-banking financial sector players, has published the December bulletin of the 'Financial Institutions Association Economic Outlook Index' (FKB-EGE) developed in collaboration with Istanbul University.
According to the data from the FKB Economic Outlook Survey, during the survey period in December 2024, the monthly inflation expectations of the participants revealed that 8.6% expected it to be lower than 2.79, 47% expected it to be between 2.8-3.59, 30.9% expected it to be between 3.6-4.4, 8.6% expected it to be between 4.41-5.2, and 4.9% expected it to be higher than 5.21. The calculation, excluding outliers, determined that the average inflation expectation for December was 3.63%.
Evaluating the participants' end-of-year inflation expectations for the current year, it was observed that 15.6% expected it to be lower than 63.59, 48% expected it to be in the range of 63.6-66.44, 23.4% expected it to be in the range of 66.45-69.3, 11.7% expected it to be in the range of 69.31-72.15, and 1.3% expected it to be above 72.16. Based on calculations excluding outliers, the average end-of-year inflation expectation for 2023 was determined to be 65.99%.
When evaluating the participants' inflation expectations for the end of next year, it was observed that 19.5% expected it to be lower than 39.59, 56.1% expected it to be in the range of 39.6-47.19, 17.1% expected it to be in the range of 47.2-54.8, 6.1% expected it to be in the range of 54.81-62.4, and 1.2% expected it to be above 62.41. The calculation, disregarding outliers, indicated that the average inflation expectation for the end of 2024 was 44.04%.
The report stated: "In the research, sector managers' expectations for the exchange rate of the US dollar were asked for the end of the current month, the end of the current year, and the end of next year. Upon evaluating the predictions of participants for the end of the current month regarding the US dollar exchange rate, it was observed that 33.7% expected it to be lower than 29.59, 48.2% expected it to be in the range of 29.6-30.19, 10.9% expected it to be in the range of 30.2-30.8, 6% expected it to be in the range of 30.81-31.4, and 1.2% expected it to be above 31.41. The calculation, without considering outliers, found that the average exchange rate expectation for the end of December was 29.83 TL.
When examining the participants' exchange rate expectations for the end of the current year, it was noted that 18% expected it to be lower than 29.39, 12.8% expected it to be in the range of 29.4-29.79, 52.6% expected it to be in the range of 29.8-30.2, 7.7% expected it to be in the range of 30.21-30.6, and 9% expected it to be above 30.61. Excluding outliers, the average exchange rate expectation for the end of 2023 was determined to be 29.87 TL.
Regarding the participants’ expectations for the exchange rate of the US dollar at the end of next year, it was observed that 8.4% expected it to be lower than 35.79, 32.5% expected it to be in the range of 35.8-39.5, 45.8% expected it to be in the range of 39.51-43.22, 8.4% expected it to be in the range of 43.23-46.93, and 4.8% expected it to be above 46.94. The calculation, excluding outliers, found that the average expectation for the exchange rate at the end of 2024 was 39.93 TL.
Interest Rate Expectations The research also inquired about sector managers' expectations for short-term commercial loan interest rates and the average sector interest rates. In evaluating the predictions of participants regarding short-term commercial loan interest rate expectations, it was found that 3.7% expected it to be lower than 41.79, 17.1% expected it to be in the range of 41.8-47.59, 35.4% expected it to be in the range of 47.6-53.4, 26.9% expected it to be in the range of 53.41-59.2, and 17.1% expected it to be above 59.21. Excluding outliers, the average expectation for the short-term commercial loan interest rate was determined to be 52.36%.
Regarding the average sector interest rate expectations, 6.6% expected it to be lower than 49.99, 35.5% expected it to be in the range of 50.00-59.99, 46% expected it to be in the range of 60.00-70.00, 9.2% expected it to be in the range of 70.01-80.00, and 2.6% expected it to be above 80.01. Excluding outliers, the average expectation for sector interest rates was determined to be 59.91%.
GDP Growth Expectations The study also asked sector managers about their GDP growth expectations for the end of the current year and the end of next year. Evaluating the participants’ GDP growth expectations for the end of the current year, it was found that 9.3% expected it to be lower than 3.54, 45.3% expected it to be in the range of 3.55-4.09, 36% expected it to be in the range of 4.1-4.65, 8% expected it to be in the range of 4.66-5.2, and 1.3% expected it to be above 5.21. The calculation, excluding outliers, indicated that the average GDP growth expectation for the end of 2023 was 4.13%.
When evaluating the participants’ GDP growth expectations for the end of next year, it was found that 3.8% expected it to be lower than 2.39, 21.5% expected it to be in the range of 2.4-3.29, 54.4% expected it to be in the range of 3.3-4.2, 19% expected it to be in the range of 4.21-5.1, and 1.3% expected it to be above 5.11. Excluding outliers, the average GDP growth expectation for the end of 2024 was determined to be 3.67%.