Morgan Stanley Dean Witter has forecast that Turkey’s wholesale price index (WPI) will increase by 19 percent and its consumer price index (CPI) by 23 percent during the course of 2001. This is down from 32.7 percent and 39 percent respectively in 2000 reported the Turkish Daily News.
Commenting, Serhan Cevik, Morgan Stanley Dean Witter’s Turkey analyst, said that one reason for this sudden turnaround is the weakness of the US dollar, which lowered domestic prices of imported commodities and intermediate goods.
However, stated Morgan Stanley Dean Witter, while the latest inflation figures are encouraging, they are still well above the official targets and a tight money policy will still be required to meet the Turkish government’s goal of single-digit inflation by the end of 2002.
Nonetheless, Morgan Stanley Dean Witter notes that, when it comes to Turkey’s perennial battle against inflation, many external factors are likely to work in its favor. Declining energy prices will ease the burden of domestic price adjustment and keep public sector price increases under control.
Furthermore, a continued weakness of the US dollar will create a situation in which Turkish manufacturers would adopt pricing strategies that are consistent with the government’s macroeconomic policies.
This, however, may be tempered by the newfound strength of the euro, which could provide upward pressure on consumer prices, because in Turkey imported consumer products are usually priced in European currencies. ¯ (Albawaba-MEBG)
© 2001 Mena Report (www.menareport.com)
