VAKIFBANK
ANNUAL REPORT 2015
32
FOREIGN TRADE DEFICIT LOWERED TO
USD 63.3 BILLION IN 2015
In 2015, there was a considerable improvement
in the foreign trade deficit over the prior year.
The said improvement is closely related to the
drop in imports. As lower oil prices brought
down Turkey’s energy import bill, foreign trade
deficit contracted in 2015. Besides, sluggish
domestic demand during the said period also
contributed to the contraction of the foreign
trade deficit. However, exports were also seen
to drop in the said period, due to ongoing
economic woes in Turkey’s main commercial
partners and the depreciation of the euro
against the dollar.
The fall in energy prices and its favorable
base effect on the foreign trade deficit will
end in 2016, and the Turkish lira continues
to appreciate against the euro, both of
which suggest that the improvement in
Turkish foreign trade could be interrupted.
Furthermore, the de-escalation of the
tension between Turkey and Russia and the
disappearance of electoral uncertainties
could lead to a surge in domestic
consumption, which could reverse the
improved foreign trade performance.
INFLATION REMAINED HIGH IN 2015 DUE
TO THE EXCHANGE RATE
The inflation rate closed the year 2015 at
8.81%, higher than the previous year and
the objective set by Central Bank of Turkey.
In 2015, the exchange rate, food prices, and
lower international oil prices were key factors
determining the inflation rate. Although inflation
tilted downwards due to the global drop in oil
prices in 2015, the fluctuation of the exchange
rate during the year led to a spike. Overall,
the inflation rate closed the year at higher
than expected levels. In the coming era, the
evolution of food prices and the exchange rate
are set to remain key factors affecting inflation.
Furthermore, the 30% increase in the minimum
wage could add 0.5 to 0.8 points to the inflation
for 2016. Taking all these factors into account,
it should be expected that upward pressures on
inflation will continue in 2016 and that the year-
end inflation rate could once again be higher
than anticipated.
Pursuing a policy focused on price stability
as well as financial stability, Central Bank of Turkey
continued to employ interest rates and other
instruments in 2015.
11
10
9
8
7
6
5
4
3
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
CPI (y-y, %)
Source: CBT, TURKSTAT
7.7
9.7
8.4
10.1
6.5
6.4
10.5
6.2
7.4
8.2
8.8
CPI BY YEAR
CBT Target
THE WORLD AND TURKEY IN 2015
