Turkish economy grew 3.2% in 2024

Turkey saw y/y growth of 3.0% in Q4, much stronger than the predicted 2.5% and up from 2.2% the previous quarter (revised up from 2.1% on the initial print) and resulting in annual growth of 3.2%. On a quarterly basis, growth was 1.7%, taking the country out of the technical recession logged over Q2 and Q3 when q/q growth was -0.2% and -0.1% respectively. The rebound was fueled by easing monetary policy from the TCMB as it cut interest rates from record highs amid slowing inflation. Consensus forecasts put growth at 2.6% this year. Meanwhile, unemployment ticked down to 8.4% in January, down from 8.5% in December and the lowest since late 2012.

UAE petrol prices for the month of March were set at AED 2.73 for a litre of super 98, down marginally from the AED 2.74/litre in February but 9.9% lower than the AED 3.03/litre charged in March 2024, meaning that the transport component of the CPI basket will continue to exert a downward drag on the headline inflation figure.

CPI inflation in France came in lower than expected in February as prices were flat m/m according to the preliminary data, beating predictions of a 0.2% rise. On an annual basis, inflation was at 0.9%, down from 1.8% in January and compared with the predicted 1.1%. This marked a four-year low for the measure. On the other hand, German inflation came in slightly hotter than predicted at 0.6% m/m and 2.8% y/y, compared with the expected 0.5% and 2.7%. The ECB is scheduled to hold its rate-setting meeting on Thursday, with a 25bps cut to the deposit facility rate expected, which would take the benchmark rate down to 2.50%, the lowest since February 2023.

The US PCE price index logged an increase of 0.3% m/m in January, unchanged from the pace seen in December and in line with expectations. The annual measure was up 2.5%, down slightly from 2.6% the previous month and supportive of further rate cuts from the Fed. Personal spending meanwhile surprised as it contracted by 0.2% m/m in January, down from 0.8% growth the previous month and short of a predicted 0.2% rise. Cold weather contributed to the fall in consumption but the data still raises questions about whether the much-feted resilience of the US consumer is starting to wane.

Today’s Economic Data and Events

19:00 US ISM manufacturing, February. Forecast: 50.5

Fixed Income

• The surprise fall in consumer spending in January further fueled the rally in US treasuries and there was a further fall in yields on Friday, marking the sixth straight session. As a result, the 2yr ended the month at 3.9889%, back below 4% for the first time since October and down 21bps m/m. The 10yr closed at 4.2082%, down 33bps m/m.

FX

• The dollar index had a strong close to the week, trading up against its basket of peers for three days straight and boosted by geopolitical concerns on Friday. Nevertheless, it closed down 0.7% m/m.
• Despite losing ground last week, EUR still closed higher over the month against the greenback, closing Friday at 1.0375, up 0.1% m/m. GBP ended February at 1.2577, up 1.5%.

Equities

• US equity markets have had a fairly volatile February but all three benchmark indices saw strong gains on Friday which helped boost their monthly performance. As a result, the NASDAQ pared its losses to 2.8%, while the S&P 500 was down 0.7% m/m and the Dow Jones 1.3%.
• In Europe, the DAX was an outperformer, ending the month up 5.2% while France’s CAC added 3.3% and the FTSE 100 ended February up 2.6% m/m.
• Locally, the ADX closed the month down 0.1% while the DFM gained 2.6%.

Commodities

• The risk of a trade war as the US maintains that it will go ahead with imposing tariffs on trade partners has weighed on oil prices through the past month, and both benchmarks ended February materially lower.
• Prices for Brent futures dropped 5.2% m/m to USD 72/8/b while WTI was down 3.8% m/m on Friday at 69.8/b.