Macroeconomic Evaluation

1. Global Macroeconomic Outlook

The global macroeconomic picture as of mid-2026 is still shaped by a "slowdown" and "instability" caused by high interest rates. Although the US economy shows a slight slowdown in growth rate, inflation is steadily decreasing. The US growth rate has fallen to 1.5% on a quarterly basis and 1.5% on an annual basis. This slowdown is the key factor that allows central banks to stop raising interest rates. While core PCE inflation is at 3.3% annually, monthly inflation remains at very low levels of 0.2%. This situation is causing the Fed to adopt a more flexible stance in its interest rate decisions. The Fed's current policy rate is 4.0%, and it is expected to rise to 4.1% in the next year's projections. These data show that global liquidity continues to tighten, but inflation is beginning to be brought under control.

In the Eurozone, however, the picture is somewhat more complex. While inflation stands at 3.2% annually, monthly inflation has been limited to 1.84%. Core inflation is at 2.4%, just above the target. Eurozone growth is following a very weak path at 0.6% on a quarterly basis. This situation increases the likelihood of the European Central Bank (ECB) maintaining a tougher stance on interest rates. The ECB's policy rate is at 2.65%, which is still significantly higher than US interest rates. The monthly decline of consumer confidence by 16.5 points in the Eurozone indicates weakening domestic demand. Industrial production and retail sales are also negative on a monthly basis, with limited annual growth. This situation reveals that the Eurozone is more vulnerable to the global slowdown.

Global risk appetite is currently quite balanced. The VIX index (fear index) is at 15.64, while US Treasury yields are on an upward trend. While the US 3-month Treasury rate is at 4%, the 30-year Treasury rate is at 5.46%. This situation shows that markets' long-term inflation expectations are rising. The DXY (Dollar Index) is at 101.28, which means the dollar is strong. The strength of the dollar limits global risk appetite and causes other currencies to lose value. This situation affects global trade and capital flows, creating pressure especially on emerging economies.

2. Turkey's Macroeconomic Outlook

Turkey's macroeconomic outlook in mid-2026 is going through a period where the fight against inflation is deepening and the costs associated with this are putting pressure on growth. According to TÜİK data, the annual inflation rate is at 31.51%, while monthly inflation has entered a downward trend at 1.84%. This situation shows that inflation is beginning to peak. The Producer Price Index (PPI) remains at high levels with 27.95% annually, while monthly inflation at 2.57% shows that the underlying pressure of inflation continues. These data show that significant effort is still being made in the fight against inflation and that results are being seen slowly.

Growth has slowed due to high interest rates in the fight against inflation. The quarterly growth rate is 2.3%, and the annual growth rate is also at 2.3%. This growth rate is at a low level compared to previous years. Industrial production fell by 1% monthly and remained at a very low level of -0,323% annually. This situation shows the slowdown in the production sector. Retail sales, on the other hand, are at a very low level of 0.2% monthly, while still showing high growth of 2.3% annually. This situation shows that consumption is still strong, but demand is slowing.

The unemployment rate remains at high levels of 8.3%. The economic participation rate is at 52.5%, showing a bottleneck in the labor market. The capacity utilization rate is at 74.2%, showing that production facilities have a high occupancy rate. This situation shows that despite the slowdown in production, capacities are not being used due to insufficient demand. Consumer confidence fell to 91.9 points monthly, and the economic expectations index rose to 100.6 points. These data show that people are dissatisfied with the economic situation and expect some improvement in their expectations.

3. Domestic Demand, Credit and Liquidity

Domestic demand in Turkey has weakened due to high policy interest rates. The CBRT's policy rate is at 37.0%, which is a very high level for fighting inflation. This high interest rate has also increased banks' credit costs. Consumer and corporate credit growth has entered a downward trend annually. Deposit interest rates are also at high levels, limiting savings. M3 money supply growth is at 2.3% annually, showing limited liquidity. This situation is causing a weakening of demand in the economy.

The channel from policy rate to credit cost is currently quite effective. High policy interest rates also raise banks' lending rates, which limits consumer and corporate demand. Consumer loans have entered a downward trend at 3.1% annually, while corporate loans have entered a downward trend at 4.4% annually. This situation shows that consumer and corporate spending are slowing. Deposit interest rates are at high levels, limiting savings. This situation is causing a weakening of demand in the economy. Liquidity is limited by M3 money supply growth. This situation is causing a weakening of demand in the economy.

4. Global Risk Appetite and Interest Rate Expectations

Global risk appetite is currently quite balanced. The VIX index (fear index) is at 15.64, showing that markets have high risk appetite. US Treasury yields are on an upward trend due to rising long-term inflation expectations. While the US 3-month Treasury rate is at 4%, the 30-year Treasury rate is at 5.46%. This situation shows that markets' long-term inflation expectations are rising. The Fed's interest rate projections expect it to reach 4% in one year. This situation increases the likelihood of the Fed maintaining a tougher stance on interest rates.

Global risk appetite has possible reflections on BIST. High interest rates limit global capital flows. This situation causes a decrease in foreign portfolio investments in BIST. High interest rates also increase banks' credit costs in Turkey, limiting demand in the economy. This situation limits corporate profits in BIST. High interest rates increase the profitability of banks in Turkey. This situation increases the value of bank shares in BIST. This situation increases the value of bank shares in BIST.

5. Budget and External Balance

Turkey's budget balance is showing improvement in mid-2026. The monthly budget deficit has decreased from -378.1 billion TL to 12.9 billion TL. This situation shows that the budget deficit is decreasing. The budget/GDP ratio is at -2.9% annually, showing that the budget deficit is 2.9% of GDP. This situation shows that the budget deficit is decreasing. The current balance is at 0.04 billion dollars, almost balanced. The trade balance is at 23.5 billion dollars, showing that imports exceed exports. Exports are at 23.5 billion dollars, while imports are at 28.7 billion dollars, showing that imports exceed exports.

Tourism revenues are at 15.9 billion dollars, at high levels compared to previous years. The number of tourists is at a very low level of -0.3% annually. This situation shows that the increase in tourism revenues is due to the increase in spending per tourist rather than the increase in the number of tourists. Foreign exchange reserves are at 68.44 billion dollars, at high levels compared to previous years. This situation shows that Turkey has reduced its external financing vulnerability. External financing vulnerability shows Turkey's ability to meet its external financing needs.

6. Energy, Commodities, Foreign Exchange and Bond Markets

Energy prices are on an upward trend in mid-2026. Brent oil is trading at $107.63/barrel, remaining at high levels compared to previous years. WTI oil is trading at $95.41/barrel, remaining at high levels compared to previous years. This situation shows that rising energy prices have increased Turkey's import costs and created pressure on inflation. Rising energy prices show that Turkey's foreign exchange reserves are being depleted. Foreign exchange reserves are trading at $68.44 billion, remaining at high levels compared to previous years.

Gold is trading at $4.304.70/ounce, remaining at high levels compared to previous years. Gram gold is trading at 6.760.59 TL/gram, remaining at high levels compared to previous years. This situation shows the value of gold. Exchange rates are showing a balancing in mid-2026. USD/TRY is trading at 48.85 TL, remaining at low levels compared to previous years. EUR/TRY is trading at 55.65 TL, remaining at low levels compared to previous years. This situation shows that exchange rates have balanced. DXY (Dollar Index) is trading at 101.28, remaining at high levels compared to previous years. This situation shows that the dollar is strong.

Bond yields are on an upward trend in mid-2026. US 30-year bond yield is trading at 4%, remaining at high levels compared to previous years. US 3-month bond yield is trading at 4%, remaining at high levels compared to previous years. US 5-year bond yield is trading at 4%, remaining at high levels compared to previous years. This situation shows that bond yields are rising. In Turkey, government bond yields remain at high levels due to high policy interest rates. This situation shows that Turkey's borrowing costs are increasing.

7. Transmission Mechanisms: From Macro to Market

The channel from policy interest rate to credit cost and domestic demand is currently quite effective. High policy interest rates also raise banks' lending rates, which limits consumer and corporate demand. Consumer loans have decreased by 3.1% annually, while corporate loans have decreased by 4.4% annually. This situation shows that consumer and corporate spending have slowed. Deposit interest rates are at high levels, limiting savings capacity. This situation causes weakening of demand in the economy.

The exchange rate channel is creating pressure on import input costs and inflation. It shows that exchange rates have balanced. DXY (Dollar Index) is trading at 101.28, remaining at high levels compared to previous years. This situation shows that the dollar is strong. The strength of the dollar shows that import input costs have increased and created pressure on inflation. Global interest rates affect foreign capital flows. High global interest rates are limiting foreign capital flows. This situation causes a decrease in foreign portfolio investments in Turkey.

Company sales have been limited due to slowing demand. Retail sales are at a very low level with 0.2% monthly growth, but still show high growth of 2.3% annually. This situation shows that consumption is still strong but demand is slowing. Margins are limited due to slowing demand. Company profitability is limited due to slowing demand. Valuation is limited due to slowing demand. Company values are limited due to slowing demand.

8. Reflections on BIST 30: Sector Channels

BIST 100 index has entered a downward trend in mid-2026. The index is trading at 15.940 points, remaining at low levels compared to previous years. BIST 30 index is trading at 15.940.38 points, remaining at low levels compared to previous years. The decline in the indices reflects the weakening of macroeconomic data. Bank shares are gaining profitability in a high interest rate environment. Because banks' lending rates are high, banks' profitability is increasing. This situation is increasing the value of bank shares. Industrial shares are limited due to slowing demand. Sales of industrial companies are limited due to slowing demand. Holding shares are affected by the economic slowdown. Profitability of holding companies is affected by the economic slowdown. Retail shares are limited due to slowing demand. Sales of retail companies are limited due to slowing demand.

9. Scenarios and Monitoring Framework

The base scenario is one where inflation gradually decreases and growth continues to slow. In this scenario, the policy interest rate is expected to remain at 37.0%, with inflation falling below 31.51% annually from the 31.51% level. Growth is expected to decrease from 2.3% to 1.5% annually. This scenario is consistent with current data.

The optimistic scenario is one where inflation decreases faster and growth does not slow down faster. In this scenario, the policy interest rate is expected to decrease to 37% annually. Growth is expected to increase from 2.3% to 3.0% annually. This scenario is not consistent with the data.

The pessimistic scenario is one where inflation does not decrease faster and growth slows down faster. In this scenario, the policy interest rate is expected to rise to 37% annually. Growth is expected to decrease from 2.3% to 1.0% annually. This scenario is not consistent with the data.

Indicators to be monitored in the coming period will be inflation data, growth data, policy interest rate decisions, budget balance and current account balance data. It is expected that inflation will fall below 31.51% annually, growth will remain at 2.3%, the policy interest rate will remain at 35% showing determination in fighting inflation, the budget balance will improve and the current account will balance.

10. Conclusion and Evaluation

Turkey's macroeconomic outlook in mid-2026 is going through a period where the fight against inflation is deepening and the costs of this are putting pressure on growth. High policy interest rates are reducing inflation but slowing growth. Inflation is still at a very high level, trading at 31.51% annually. Growth has slowed, with 1.1% quarterly and 2.3% annually. The unemployment rate is at 8.3%, remaining at high levels. BIST indices reflect the weakening of macroeconomic data. Bank shares are gaining profitability in a high interest rate environment. Industrial shares are limited due to slowing demand. This report is not investment advice; it is for educational and analytical purposes.

Data Base (key indicators used in analysis)