Levent Gürses
The most significant developments of the week were the further upward revision of inflation forecasts and US President Donald Trump’s highly critical visit to China.
As the oil giants announce their first-quarter results, the winners of the Iran conflict and the losers, such as the Turkish economy, are coming to light.
Central Bank Governor Fatih Karahan announced the second Inflation Report of the year on 14 May. Due to global energy shocks and logistical risks in the Strait of Hormuz, the report raised the interim year-end inflation target to 24 per cent. This target had been announced as 16 per cent in the first report in February. The year-end inflation forecast stands at 26 per cent, two percentage points above the interim target.
The report emphasised that the tight monetary policy would be maintained for longer than previously anticipated.
With the interim inflation target at 26 per cent and the year-end target at 24 per cent (previously 16 per cent), Central Bank Governor Karahan stated, “We need to maintain caution against risks to inflation,” noting that they must prevent a deterioration in the medium-term outlook due to short-term inflationary effects.
Regarding the stance of monetary policy, Karahan conveyed the message: “We believe the current stance is appropriate until uncertainty subsides; all options remain on the table for the future.”
Inflation will have fallen by just 4.9 percentage points
The Consumer Price Index (CPI) stood at 30.9 per cent by the end of 2025. If this forecast materialises, annual inflation will have fallen by just 4.9 percentage points between December 2025 and December 2026. The Central Bank announced an inflation forecast of 15 per cent for the end of 2027 and 9 per cent for the end of 2028. The last time single-digit inflation was recorded in Turkey was in 2019.
The Central Bank revised its forecast following the rise in monthly inflation to 4.18 per cent and the annual rate to 32.87 per cent in April 2026, with four-month inflation reaching 14 per cent. The Central Bank has revised its inflation forecast for the 16th time in five years.
The interim target has been raised to 15 per cent for 2027 and 9 per cent for 2028.
With the year-end interim target raised from 16 per cent to 24 per cent, workers and pensioners whose wages are being eroded by inflation face even tougher times ahead. The fact that wage increases are determined based on these low forecasts has led to millions of workers being crushed by inflation.
Pay rises were granted to civil servants, minimum wage earners and pensioners based on the old target
Labour economics expert Prof. Dr. Aziz Çelik argued that trade unions should be raising a huge outcry in response to the inflation revision.
Prof. Dr. Çelik wrote the following after the Central Bank raised its 2026 year-end inflation target—set at 12 per cent a year ago—to 26 per cent:
“They set the minimum wage based on the 12 per cent target. They gave pay rises to civil servants and pensioners based on that target. Now, suddenly 26 per cent! No such luck! Now we need to revise all labour incomes, starting with the minimum wage and civil servant salaries. An immediate interim pay rise!‘
’The target changed in a flash, but salaries didn’t‘
Murat Muratoğlu, a columnist for Nefes Newspaper, wrote on social media: ’The minimum wage was set based on a 16 per cent target. Civil servant salaries were awarded based on a 16 per cent target. Rents, tax brackets, bills – all are indexed to 16 per cent. The Central Bank’s target suddenly jumped to 24 per cent. The target changed overnight, but salaries didn’t. So what’s going to happen now?”
Pensioners are poor, unhappy and queuing for work
The “Research Report on Pensioner Poverty in Turkey”, prepared by the Forum Social Research Institute, revealed through data that retirement has now become nothing more than a struggle for survival. According to the report, whilst 89 per cent of pensioners cannot meet their needs without working, 98.6 per cent of pensioners have credit card debt. 56.2 per cent of pensioners stated they could not access healthcare services, whilst 47.3 per cent said they were dissatisfied with their lives.
Guaranteed funding – 28 billion dollars went to hospitals over 8 years, 4.5 billion dollars last year alone
Over 28 billion dollars has been paid to Public-Private Partnership (PPP) projects since 2018. Economist İnan Mutlu stated that 28 billion 141 million dollars has been paid to PPP projects, such as city hospitals and bridges and motorways, between 2018 and the end of 2025.
İnan Mutlu also calculated the 2025 PPP bill. According to this, last year 111.1 billion lira was paid from the budget to city hospitals, 85 billion lira to foreign currency-guaranteed bridges and motorways, and 9.8 billion lira to airports without passenger guarantees.
The total figure amounts to 206 billion lira. The equivalent in dollars exceeds 4.52 billion dollars.
İnan Mutlu says: “Let’s give an example to illustrate the scale of these figures. The total amount of Eid bonuses paid to approximately 17 million pensioners, widows, orphans, etc., during the last Eid al-Fitr was 58 billion lira.”
The winners of the war are, of course, the oil giants
The first quarter of 2026 marked a brilliant period for the profitability of the oil giants. BP’s profit nearly quadrupled. The Saudi giant Aramco made a profit of 32.5 billion dollars in a single quarter.
By increasing its profit from 1.0 billion dollars in the first quarter of last year by 320 per cent to 4.2 billion dollars in the first quarter of this year, BP emerged as the winner of the war for the period.
TotalEnergies also increased its profit by 51 per cent to $5.9 billion, whilst Shell and Equinor saw increases of 18 per cent and 19 per cent respectively in the first quarter.
Saudi Aramco, meanwhile, increased its profit by 25 per cent, from $26 billion to $32.5 billion. This is more than the combined total of ExxonMobil, Chevron, ConocoPhillips and Eni…
On the other hand, US oil companies saw a decline in profits. ExxonMobil saw a 44 per cent drop, Chevron a 34 per cent drop, and ConocoPhillips a 21 per cent drop in profits.
Trump’s Visit to China Created a Positive Atmosphere
US President Donald Trump’s visit to China on 14–15 May was the focus of global attention. In particular, negotiations regarding tariffs, sanctions and technology restrictions in the technology sector were closely monitored. It is reported that issues such as artificial intelligence and semiconductors, Taiwan, Iran and energy flows, and rare earth element supply chains were discussed during the visit.
Trump stated that the Beijing administration had given assurances that it would no longer “supply weapons” to Iran.
Trump noted that Chinese President Xi had expressed a desire for the Strait of Hormuz to remain open and that he “wished for an agreement to be reached”.
He also mentioned that Chinese President Xi Jinping had agreed to purchase 200 aircraft from the American aircraft manufacturer Boeing. Trump emphasised that the deal would create significant employment in the US, saying, “Boeing wanted 150, they got 200.”
Trump was accompanied by a business delegation comprising CEOs and senior executives from 17 major American companies operating in the fields of finance, technology, aviation and trade.
Xi: China and the US must respond to the challenges of our time together
In his statement following the meeting with Trump in Beijing, Chinese President Xi Jinping said they wished to discuss issues of concern to both countries and the world, and to open a new chapter for the future by advancing relations in the right direction.
Highlighting that unprecedented transformations are accelerating on a global scale, that the international situation is volatile and turbulent, and that the world stands at a new historical crossroads, Xi said, “China and the US must respond to the challenges of our time together.”
Emphasising that China and the US have more in common than differences, and that one country’s success is an opportunity for the other, Xi stated that the two countries should be partners rather than rivals, and that they must find the right path for major powers to coexist by contributing to each other’s success and prosperity.
Passage of Chinese ships through the Strait of Hormuz has begun to accelerate
Iranian state television announced that, in the last few hours, more than 30 ships have passed through the Strait of Hormuz under the supervision of the Revolutionary Guards and via the designated route. A warning was issued that no ship should attempt to pass without authorisation.
It was reported that, following talks between Tehran and Petin, an agreement had been reached regarding the passage of Chinese ships through the Strait of Hormuz.
Birol: Oil prices could rise above $100 a barrel
Fatih Birol, Executive Director of the International Energy Agency, told CNBC-e that current oil prices are above $100 a barrel and indicated they could rise further. Birol emphasised that these oil prices are putting upward pressure on inflation.
Birol stated that the closure of the Strait of Hormuz poses a serious risk to global energy supply and warned that the strait must be opened “immediately and unconditionally” for a permanent solution.
Global oil supply rises monthly but falls annually
The US Energy Information Administration (EIA) reported that global oil supply improved in April.
The EIA reported that global oil supply, which stood at 12.87 million barrels per day in March, rose to 15.61 million barrels per day in April. This represents a monthly increase of 2.74 million barrels per day.
Meanwhile, according to Morgan Stanley data, global oil reserves fell by 4.8 million barrels per day on an annual basis between March and April. Consequently, global stocks have fallen to their lowest level in eight years. According to JPMorgan data, OPEC production is also at its lowest level in 36 years.
The Iraqi Ministry of Oil is opening three new export channels: the Basra-Haditha pipeline, Turkey, Syria and Jordan. According to a report by Sputnik, whilst concerns are mounting over ongoing disruptions threatening oil exports via the Strait of Hormuz, Iraq is relaunching one of its largest strategic energy projects: the massive oil pipeline project stretching from Basra to Haditha, which boasts a colossal capacity of 2.5 million barrels per day.
The project is not limited to oil transportation alone; it also opens up three new export routes for Iraq to Turkey, Syria and Jordan.
OPEC has lowered its global oil demand forecast
In a report published on 13 May, OPEC revised downwards its forecast for global oil demand growth in 2026, citing signs of economic slowdown in China and Europe. Despite this, the price of Brent crude remained high at around $105 per barrel due to geopolitical risks.
Current account deficit at three-year high
Driven by rising global energy costs, the current account deficit for March stood at $9.67 billion, with pressure on the trade balance persisting. According to TCMB data, the current account recorded a deficit of $9.67 billion in March. This marked the highest monthly deficit in the last three years.
Based on annualised figures, the current account deficit for March was recorded at $39.7 billion
A sharp rise in mortgage-backed home sales
April’s home sales statistics have been released. While home sales reached 126,808 units—a 2.6 per cent annual increase and the highest level in the last four months—the 40.5 per cent surge in mortgage-backed (loan-financed) sales stood out, despite persistently high interest rates.
Çömez paints a current picture of the agriculture and livestock sector…
Turhan Çömez, Deputy Group Leader of the Good Party in the Turkish Grand National Assembly, revealed striking figures regarding the agricultural sector. Çömez stated:
“Milk production in 2025 decreased by a full 1.1 million tonnes compared to the previous year.
Meat production, meanwhile, fell by 220,000 tonnes. We are paying 265 million lira every day for meat and live animal imports. In 2024, the Meat and Milk Board imported 250,000 tonnes of meat, paying 1.2 billion dollars for it. The meat it purchased from domestic producers, however, amounted to just 18,000 tonnes. While the Meat and Milk Board paid 155.7 TL to foreign suppliers for 1 kilo of imported meat, it paid 51 TL to domestic producers. As Turkish agriculture and livestock farming are being systematically dismantled, foreigners are getting rich and the pockets of intermediary gangs are being lined.”
Çömez made the following comments regarding the poultry sector:
“They banned white meat exports to halt the rising prices of white meat before Ramadan. Chicken wings, which cost 200 lira three months ago, now cost 299 lira. That’s a 49.5 per cent increase!
We urged them to undertake studies on input costs and take steps to reduce feed, energy, medication, veterinary, staff and operational expenses, but they wouldn’t listen. These people don’t understand production; they only understand rent-seeking, plunder, debt and looting.”
A $5.3 billion package for the agricultural sector
Vice President Cevdet Yılmaz announced a $5.3 billion agricultural support package, stating that the focus would be on irrigation investments to increase agricultural production and ensure food supply security.
Job losses in clothing and textiles reach 128,000
According to the February 2026 Employment Monitoring Bulletin published by TEPAV, total job losses in the clothing, textile and leather manufacturing sectors reached 127,736 people. The sharpest decline in the number of salaried workers over the last six months was observed in Antalya, Muğla and İzmir.
Sharp rise in inflation and, in particular, energy prices in the US
Consumer inflation in the US rose by 3.8 per cent in April. Alongside the rise in headline inflation, there were sharp increases in certain categories. Energy commodities rose by 29.2 per cent, petrol by 28.4 per cent, air travel by 20.7 per cent, energy costs by 17.9 per cent, electricity by 6.1 per cent, and fruit and vegetables by 6.1 per cent.
Meanwhile, in the US, the PPI rose by 1.4 per cent in April, whilst the annual increase stood at 6 per cent. This marked the highest monthly increase since March 2022.
War is affecting US indicators, with a slowdown in consumption
In the US, jobless claims rose above expectations last week to 211,000. The median forecast by economists had been for claims to come in at 205,000.
Retail sales, meanwhile, rose by 0.5 per cent in April despite a slowdown. This slowdown was driven by high petrol prices, which prompted consumers to curb their spending.
Retail sales had risen by 1.6 per cent the previous month. Sales excluding motor vehicles rose by 0.7 per cent.
‘The global economy is entering a negative scenario trajectory’
International Monetary Fund (IMF) Spokesperson Julie Kozack stated that, due to the war in the Middle East driving up energy costs, the global economy has moved away from the ‘baseline’ scenario and entered a ‘negative scenario’ trajectory.
Kozack also noted that they have been closely monitoring and analysing the policy measures implemented by countries since the war began at the end of February.
Senate approval for leadership change at the Fed
In a corporate development affecting global markets, Kevin Warsh was confirmed as the new Fed chair under pressure from Donald Trump. This appointment has reignited debates regarding the Fed’s independence and future interest rate policies.
The US Senate confirmed Kevin Warsh as Fed chair by a vote of 54 to 45. Outgoing Fed Chair Jerome Powell, however, will be remembered for the “leadership” stance he adopted in the face of Donald Trump’s political pressure. Throughout his tenure, Jerome Powell faced Donald Trump’s harsh criticism, threats of dismissal and pressure from legal investigations. Whilst Trump represented power, Powell safeguarded the Fed’s independence against that power
Inflation is the greatest pressure on interest rate decisions
Kansas City Fed President Jeffrey Schmid noted that the US economy continues to grow despite geopolitical risks and high energy costs, but that inflation, hovering around the 4 per cent mark, is the biggest pressure point on interest rate decisions.
Schmid also stated that inflation is not solely driven by energy costs, but that price increases are spreading across the wider economy.
BYD is looking for vacant factories in Europe
Chinese automotive giant BYD has set its sights on vacant factories across Europe. The company, which has been in talks with major manufacturers including Stellantis, aims to take full control of the facilities rather than form partnerships, heralding a new era that could fundamentally transform the European automotive industry in the electric vehicle race.
Signs of growth from the UK economy
The UK economy recorded 0.6% growth in the first quarter of 2026, outperforming expectations. This data provided a much-needed respite for Prime Minister Keir Starmer’s government, which is struggling to emerge from recession.
FAO: Global Food Price Index on the rise
The UN Food and Agriculture Organisation (FAO) reported that global food prices rose by 1.6% in April, continuing their upward trend for the third consecutive month, driven by the logistics crisis in the Strait of Hormuz and high energy costs.
Other key developments of the week are as follows:
Signs of a slowdown in domestic markets continued to be observed due to the impact of tightening measures. According to TÜİK data, the industrial production index fell by 0.8 per cent month-on-month and 1.1 per cent year-on-year in March.
It was announced that the Central Bank’s net reserves (excluding swaps) stood at $39 billion and gross reserves at $172 billion as of 8 May.
Autoliv, the world’s largest manufacturer of automotive safety systems, announced it would gradually cease its production operations in Turkey. The decision will affect approximately 2,200 employees.
The proportion of the young population within the total population is declining. According to the results of the Turkish Statistical Institute’s (TÜİK) Address-Based Population Registration System, the young population aged 15–24 accounted for 14.9 per cent of Turkey’s total population as of the end of 2024. In 2025, the young population constituted 14.8 per cent of Turkey’s population.
The banking sector’s total deposits fell by 112 billion 44 million 207 thousand lira compared to the previous week, reaching 30 trillion 366 billion 496 million 277 thousand lira in the week ending 8 May. The volume of loans rose to 24 trillion 928.2 billion lira.
According to Central Bank data, foreign investors purchased 214.5 million dollars’ worth of shares during the week ending 8 May, whilst bond purchases amounted to 181.7 million dollars. Foreign investors returned to buying shares and bonds a week later.
The International Finance Corporation (IFC), a World Bank Group institution, announced that it had increased Turkey’s share in its global investment portfolio, elevating the country to the position of the third-largest portfolio globally. Additionally, a new member from Turkey was appointed to the institution.
Switzerland-based bank UBS maintained its year-end target of $5,600 per ounce for gold and over $100 per ounce for silver, citing the impact of regional developments. The bank expects new highs in precious metals this year.
Roche has acquired PathAI to develop AI-powered digital pathology. Matt Sause, CEO of Roche Diagnostics, said: “We aim to provide healthcare professionals with more comprehensive insights and contribute to better outcomes for patients worldwide.”