1.3 million peopleACCORDING TO THE AVAILABLE FIGURES, MORE THAN 1.3 MILLION NEW JOBS WERE CREATED IN THE FIRST 10 MONTHS OF THE YEAR.

In 2017, Turkey managed to keep its growth composition balanced, while growing at a rate above its long term trend rate.

The Turkish economy is expected to have rounded off 2017 with growth of around 7%. In 2017, Turkey managed to keep its growth composition balanced while growing at a rate above its long term trend rate.

According to current figures, foreign trade contributed 1.6 percentage points to the overall rate of growth, with private consumption and investments contributing 4 points and 3 points to growth, respectively. Accelerating credit growth through policies such as the Credit Guarantee Fund (CGF) and similar growth initiatives also stimulated an increase in consumption expenditures in domestic demand. On the other hand, the use of public finance in supporting the economy and incentive programs implemented paved the way an average 6.2% YoY increase in investments in the first and second quarters of the year.

According to the available figures, more than 1.3 million new jobs were created in the first 10 months of the year. Moreover, the tourism sector rebounded with a substantial recovery. According to recently announced figures, more than 30 million tourists visited our country between January and November period, marking an increase of 28% YoY.

As we entered 2017, the risk of trade wars was cited as one of the highest risks facing the global economy. However, contrary to expectations, 2017 turned out to be a year when global trade volumes increased. The vitality of trade brought with it globally synchronized growth, and in this process, the positive reflections of the developments in Europe, our main trading partner, on the Turkish economy were seen.

The Chinese economy has achieved an annual growth rate of 6.9%, accelerating its growth on an annual basis for the first time since 2011. The fact that the Fed shares a calendar of balance sheet downsizing with the public and that the balance sheet will still have a size of USD 4 trillion at the end of one and a half years has helped increase the risk appetite while supporting trading volumes.

Despite the strengthening of the economy, the continuation of the European Central Bank’s asset purchases with inflation below its target has increased vitality in risk appetite, and the S&P 500 index ended the year with an 18.4% gain. The Borsa Istanbul benchmark index BIST 100 notched up a gain of almost 50%, while global stock indices gained 20%.

The Borsa Istanbul benchmark index BIST 100 notched up a gain of almost 50%, while global stock indices gained 20%.

In the Business Tendency Survey released by the Central Bank of Turkey, export orders are trending upward. In 2017, Turkey’s exports increased by approximately 11% on average each month, while six different industries broke records in exports.

At the beginning of 2018, the signals for global trade appear positive. The first figures of the year indicate that trade volumes will continue to increase. Positive developments are expected in the export component of the growth in 2018.

Credit demand is expected to maintain its growth in 2018 and this will bring vitality to investment expenditures. Capacity utilization rate reached 79.5% - its highest level since 2008 - indicating that installed capacity needs to be increased. This could be considered as a finding that will strengthen the tendency to increase investment expenditures. In the second half of the year, with the rebound in tourism and revival of the employment market in the summer, domestic demand-driven economy is expected to kick in with consumption expenditures taking the reins rather than foreign demand. The economy is expected to record a growth rate of 5% in 2018.

CBRTTHE CBRT MAINTAINED ITS TIGHT MONETARY POLICY IN THE FACE OF RISING INFLATION.

On the other hand, the CBRT maintained its tight monetary policy in the face of rising inflation. Through verbal communication in the communication policy, the firmness of the tight monetary policy stance has been reinforced; thus, at the beginning of the year, steps were taken to ensure there will be no changes in monetary policy, despite the decline in inflation due to the base effect.

In the first quarter of 2018, consumer inflation is expected to follow the downward trend. Similarly, it is likely that the inflation of producer prices will decline.

If the CBRT continues its tight monetary policy, inflation will remain level for the remainder of the year. High global risk appetite could set the stage for improved inflation expectations later in the year. In this case, expectations that the CBRT could signal a moderate relaxation in its tight monetary policy may gather pace in the last period of the year.