Türkiye's Inflation Seen Falling to 55% In February

People shop at Eminonu district in Istanbul People shop at Eminonu district in Istanbul, Türkiye, November 4, 2022. REUTERS/Dilara Senkaya
People shop at Eminonu district in Istanbul People shop at Eminonu district in Istanbul, Türkiye, November 4, 2022. REUTERS/Dilara Senkaya
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Türkiye's Inflation Seen Falling to 55% In February

People shop at Eminonu district in Istanbul People shop at Eminonu district in Istanbul, Türkiye, November 4, 2022. REUTERS/Dilara Senkaya
People shop at Eminonu district in Istanbul People shop at Eminonu district in Istanbul, Türkiye, November 4, 2022. REUTERS/Dilara Senkaya

Türkiye's annual inflation should slow to 55.5% in February even as prices continue to rise on a monthly basis driven by higher prices of food and services, while it is expected to end the year at 45%, according to a Reuters poll on Monday.

Inflation has been stoked by a currency crisis at the end of 2021 and it touched a 24-year peak of 85.51% in October. It fell sharply in December and eased only to 57.7% in January despite a favourable base effect due to new-year price hikes on food, goods and services.

The median estimate of 14 economists in a Reuters poll for annual inflation in February stood at 55.5%. Forecasts ranged between 54% and 56.8%.

On a monthly basis the median estimate was 3.4%, in a range of 2.3% to 4.2%, mainly due to higher food prices, price hikes in education, communication and the health sector, economists said.

Türkiye's southeast region was hit by massive earthquakes earlier this month which killed more than 44,000 people and left millions homeless in cold winter weather. Business groups and economists have said the earthquake could cost Türkiye up to $100 billion and shave one to two percentage points off growth this year.

Last week, Türkiye's central bank lowered its policy rate by 50 basis points to 8.5% to support growth in the wake of the earthquake and said the central bank will monitor its impact on the economy.

The median estimate for inflation at year-end stood at 45% in the Reuters poll, with forecasts coming in between 34% and 51.7%. The median in a poll conducted before the earthquake in January stood at 41% for end-2023.

Before the earthquake, inflation had been expected to keep falling to around 35-40% by June. However, it is now seen to be around 44% in May, according to the median forecast of six economists who gave estimates to the Reuters poll.

The Turkish Statistical Institute will announce February inflation data at 0700 GMT on March 3.



US Tariffs Could Slow China's Growth to 4.5% in 2025

People walk past a billboard which reads I love Beijing, Happy New Year at 798 art district, ahead of the upcoming Lunar New Year, marking the Year of the Snake, in Beijing on January 14, 2025. (Photo by JADE GAO / AFP)
People walk past a billboard which reads I love Beijing, Happy New Year at 798 art district, ahead of the upcoming Lunar New Year, marking the Year of the Snake, in Beijing on January 14, 2025. (Photo by JADE GAO / AFP)
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US Tariffs Could Slow China's Growth to 4.5% in 2025

People walk past a billboard which reads I love Beijing, Happy New Year at 798 art district, ahead of the upcoming Lunar New Year, marking the Year of the Snake, in Beijing on January 14, 2025. (Photo by JADE GAO / AFP)
People walk past a billboard which reads I love Beijing, Happy New Year at 798 art district, ahead of the upcoming Lunar New Year, marking the Year of the Snake, in Beijing on January 14, 2025. (Photo by JADE GAO / AFP)

China's economic growth is likely to slow to 4.5% in 2025 and cool further to 4.2% in 2026, a Reuters poll showed, with policymakers poised to roll out fresh stimulus measures to soften the blow from impending US tariff hikes.

Gross domestic product (GDP) likely grew 4.9% in 2024 - largely meeting the government's annual growth target of around 5%, helped by stimulus measures and strong exports, according to the median forecasts of 64 economists polled by Reuters.

But the world's second-largest economy faces heightened trade tensions with the United States as President-elect Donald Trump, who has proposed hefty tariffs on Chinese goods, is set to return to the White House next week.

“Potential US tariff hikes are the biggest headwind for China's growth this year, and could affect exports, corporate capex and household consumption,” analysts at UBS said in a note.

“We (also) foresee property activity continuing to fall in 2025, though with a smaller drag on growth.”

Growth likely improved to 5.0% in the fourth quarter from a year earlier, quickening from the third-quarter's 4.6% pace as a flurry of support measures began to kick in, the poll showed.

On a quarterly basis, the economy is forecast to grow 1.6% in the fourth quarter, compared with 0.9% in July-September, the poll showed.

The government is due to release fourth-quarter and full-year GDP data, along with December activity data, on Friday.

China's economy has struggled for traction since a post-pandemic rebound quickly fizzled out, with a protracted property crisis, weak demand and high local government debt levels weighing heavily on activity, souring both business and consumer confidence.

Policymakers have unveiled a blitz of stimulus measures since September, including cuts in interest rates and banks' reserve requirements ratios (RRR) and a 10 trillion yuan ($1.36 trillion) municipal debt package.

They have also expanded a trade-in scheme for consumer goods such as appliances and autos, helping to revive retail sales.

Analysts expect more stimulus to be rolled out this year, but say the scope and size of China's moves may depend on how quickly and aggressively Trump implements tariffs or other punitive measures.

More stimulus on the cards

At an agenda-setting meeting in December, Chinese leaders pledged to increase the budget deficit, issue more debt and loosen monetary policy to support economic growth in 2025.

Leaders have agreed to maintain an annual growth target of around 5% for this year, backed by a record high budget deficit ratio of 4% and 3 trillion yuan in special treasury bonds, Reuters has reported, citing sources.

The government is expected to unveil growth targets and stimulus plans during the annual parliament meeting in March.

Faced with mounting economic risks and deflationary pressures, top leaders in December ditched their 14-year-old “prudent” monetary policy stance for a “moderately loose” posture.

China's central bank is expected to deploy its most aggressive monetary tactics in a decade this year as it tries to revive the economy, but in doing so it risks quickly exhausting its firepower. It has already had to repeatedly shore up its defense of the yuan currency as downward pressure pushes it to 16-month lows.

Analysts polled by Reuters expected the central bank to cut the seven-day reverse repo rate, its key policy rate, by 10 basis points in the first quarter, leading to a same cut in the one-year loan prime rate (LPR) - the benchmark lending rate.

The PBOC may also cut the weighted average reserve requirement ratio (RRR) for banks by at least 25 basis points in the first quarter, the poll showed, after two cuts in 2024.

Consumer inflation will likely pick up to 0.8% in 2025 from 0.2% in 2024, and rise further to 1.4% in 2026, the poll showed.