Goldman Sachs Comments on Turkey’s New Administration
Appointment of Mehmet Simsek and Hafiza Gay Arkan
Goldman Sachs said the appointment of Mehmet Simsek as Turkey’s Treasury and Finance Minister and Hafiza Gay Arkan as Central Bank Governor shows the new administration’s broad understanding of the need for monetary and financial adjustments.
Economic Stability and Exchange Rates
The bank said, changing a number of its forecasts for Turkey, that economic stability “will require a major adjustment, and we believe that this will happen in stages, in relation to the exchange rate.”
Interest Rates and GDP Growth Forecast
“In our view, this indicates that the traditional politician will raise interest rates to 40%, which is the current level of the deposit rate,” Clemens Graf said in a note to bank customers.
Graf added that once the exchange rate and inflation expectations stabilize, the interest rate could be cut quickly, perhaps as much as 25% by the end of the year.
Goldman Sachs cut Turkey’s GDP growth forecast to 2.3% year-on-year in 2023 from 2.9% in the previous forecast.
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