_Economy and Finance

Turkey: Signs of Life in IP January's industrial production was 2.1% y/y, slightly below the market and our expectations of 2.5%. On a seasonally and calendar adjusted basis, IP increased by 2.3% m/m, following a decline of 3.5% m/m in December. January industrial production index shows that CBRT's monetary easing has started to reflect on manufacturing activity. Strong January IP figure combined with robust credit growth, confidence indices and PMI, points that the pickup in the economic activity will continue in Q1.

Turkey: Inflation - as expected At 0.3% m/m, February's CPI inflation was slightly below the market consensus and our forecast (both at 0.4% m/m). Consequently, annual inflation declined 0.3pp to 7.0%. The lower-than-expected CPI was mainly due to food and clothing prices. Annual food inflation fell from 6.85% in January to 5.60% in February, partly correcting the 3pp rise previous month. The decline in clothing prices was higher than the seasonal averages at 6.4% m/m in February.

Turkey: The narrowing in the current account deficit has neared to an end At USD 4.5bn, November's current account deficit was lower than the market consensus and our forecast (USD 4.8bn). Consequently, 12-month cumulative current account deficit declined to USD 51.9bn, from USD 52.8bn in October. Non-energy current account balance on a 12-month cumulative basis turned into a surplus of USD 0.4bn, from a deficit of USD 0.8bn in October. 12-month cumulative net gold exports increased to USD 5.6bn, from USD 5.2bn in October, and continued to contribute to the narrowing in the current account deficit.