According to the news published by Central Bank of Republic of Turkey, the Monetary Policy Committee (the Committee) has decided to reduce the policy rate (one-week repo auction rate) from 11.25 percent to 10.75 percent.

Recent data indicate that recovery in economic activity continues. Sectoral diffusion of economic activity continues to improve. Despite signs of recovery, investment and employment remain weak. While favorable effects of improved competitiveness prevail, weakening global economic outlook tempers external demand. As the contribution of net exports to economic growth declines, economic recovery is expected to be sustained with the help of the ongoing disinflation process and improvement in financial conditions. Nevertheless, developments in credit growth and its composition are closely monitored for their impact on external balance and inflation. Going forward, sustaining a moderate course in current account balance, which has recently recorded significant improvement, is considered as a crucial element of the macroeconomic policy mix.

Weakness in global economic activity and low levels of global inflation strengthen expectations regarding the continuation of expansionary monetary policies in advanced economies. On the other hand, recently elevated uncertainties regarding global economic outlook lead to volatility in the demand for emerging market assets and the risk appetite. Rising protectionism, uncertainty regarding global economic policies, geopolitical developments and the recent outbreak of an epidemic disease are closely monitored for their impact on capital flows, international trade and commodity prices.

Developments in inflation expectations, domestic demand conditions and producer prices have contributed to a mild trend in core inflation indicators. The improvement in macroeconomic indicators, inflation in particular, supports the fall in country risk premium and helps contain cost pressures. The course of inflation is considered to be broadly in line with the year-end inflation projection. Accordingly, considering all factors affecting the inflation outlook, the Committee decided to make a more measured cut in the policy rate. At this point, the current monetary policy stance remains consistent with the projected disinflation path.

The Committee assesses that maintaining a sustained disinflation process is a key factor for achieving lower sovereign risk, lower long-term interest rates, and stronger economic recovery. Keeping the disinflation process in track with the targeted path requires the continuation of a cautious monetary stance. In this respect, monetary stance will be determined by considering the indicators of the underlying inflation trend to ensure the continuation of the disinflation process. The Central Bank will continue to use all available instruments in pursuit of the price stability and financial stability objectives.

Kaynak: Central Bank of Republic of Turkey / link: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Announcements/Press+Releases/2020/ANO2020-08
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According to the news of Daily Sabah, the Organization for Economic Co-operation and Development (OECD) trimmed its outlook for the global economy on Thursday, saying the world was headed for its weakest economic growth since the 2007-2008 financial crisis.

Urging governments to invest in digital and climate transformation, the OECD said activity had been hobbled by weaker trade and investment in the past two years, as U.S. President Donald Trump and Chinese leaders continue to be locked in a trade conflict.

The OECD now expects economic activity around the world to expand by 2.9% next year, a decline of 0.1 percentage points from a previous forecast issued in September.

Growth was likely to remain slow, it said, with expansion in 2020-2021 seen at around 3.0%, down from a 3.5% rate projected only a year ago.

This was shaping up to be “the weakest rate since the global financial crisis,” according to OECD chief economist Laurence Boone.

Growth this year was also likely to come in at 2.9%, the OECD said in its November 2019 Economic Outlook.

Meanwhile, the OECD upgraded Turkey’s economic growth projection for 2019 to 0.3%, up from minus 0.3% from the previous one.

Noting that the growth continued to recover in recent months, the report said substantial government stimulus is lifting domestic demand more vigorously than previously anticipated and currency depreciation is supporting exports.

The organization also revised up its forecast for the growth in 2020 to 3% from 1.6%. Turkey’s economy is expected to grow 3.2% in 2021.

“Yet, weak external trade demand, geopolitical uncertainties and impaired private balance sheets are projected to keep GDP growth at around 3%, well below potential growth which itself has weakened and which may decline further due to increased policy-related distortions in the economy,” it said.

It also advised Turkey to make the macroeconomic policy framework simplified and more transparent to rebuild domestic and international confidence.

Source: Daily Sabah / link: https://www.dailysabah.com/economy/2019/11/21/oecd-upgrades-turkeys-growth-amid-weak-global-outlook
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