Deutsche Bank revises Türkiye’s inflation forecast to 40%

Deutsche Bank, a German multinational investment bank headquartered in Frankfurt, has released its year-end forecasts for Türkiye, predicting that inflation will drop to 40% and the dollar will rise to ₺37. The German banking giant also expects a 500 basis points reduction in interest rates by year-end.

Inflation to decline

Hans-Christian Wietoska, Deutsche Bank’s head of research for the Middle East and Eastern Europe, provided insights into Türkiye’s economic outlook. He highlighted that Türkiye’s net reserves have surpassed $10 billion, and international reserves are approaching $150 billion.

He stated that inflation has peaked, marking the completion of the first phase of economic stabilization. The next phase, he noted, involves a strong disinflation process, with inflation expected to drop to 40% by year-end. The challenge ahead will be reducing it further to 20%.

Interest rate expectations

Wietoska noted that with slowing economic growth and declining inflation, it would be an appropriate time for a rate cut. “We foresee a 500 basis points cut in November and December,” he said. This is part of their base scenario, and further easing is expected at the beginning of the next year.

Dollar/TL forecast

Wietoska emphasized the importance of maintaining a tight monetary policy in Türkiye.

It’s not going to be easy, but no country with 75% inflation has managed to reduce it without entering a recession. If Türkiye can balance its economy without a recession, it will set a unique example, and we are quite optimistic about this

Hans-Christian Wietoska

He warned against mid-term policy errors and noted that the year-end USD/TL forecast is ₺37, expecting a real appreciation of the TL.