Deutsche Bank Turkey Forecast: A “Tougher Macro Path” in 2026

Deutsche Bank Turkey Forecast Update: Following the escalation of tensions in the Middle East and the resulting pressure on energy markets, Deutsche Bank has released a revised macroeconomic report titled “Turkey: A Tougher Macro Path.” The bank has significantly adjusted its growth and inflation expectations, effectively taking early interest rate cuts off the table for the Central Bank of the Republic of Turkey (TCMB).

1. Growth and Inflation: A Downward Revision

The Deutsche Bank Turkey Forecast points to a “fragile” structure for the Turkish economy, hampered by weak external demand and tightening global financial conditions.

• GDP Growth: Slashed from 4.2% to 3.2%.

• 2026 Year-End Inflation: Raised from 25% to 27.5%.

Deutsche Bank notes that the disinflation process has become more difficult due to the “energy price shock” and persistent risks in services inflation, likely linked to the ongoing regional conflict.

2. Interest Rate Forecast: “Higher for Longer”

The most critical takeaway for investors is the shift in monetary policy expectations. Deutsche Bank confirms that an April interest rate cut is no longer an option.

• April Meeting: The bank expects the TCMB to keep the policy rate steady at 37%.

• 2026 Year-End Policy Rate: Revised upward from 31% to 33.5%.

3. Risk Scenarios: The “Hormuz” Factor

“Base Case” assumes that the Strait of Hormuz will eventually reopen, allowing energy prices to stabilize. However, the Deutsche Bank Turkey forecast includes a stern warning:

• Escalation Risk: If the conflict lingers and inflation expectations continue to deteriorate, the TCMB may be forced to implement further tightening (rate hikes) rather than maintaining the current level.

• Energy Pressure: Continued high oil and gas prices will keep the “hawkish” stance alive well into the second half of the year.

Revisions Summary

Source: haber.doviz.com