Aurelia Butler

Turkey’s consumer price index surged in the wake of a currency crisis sparked by an unorthodox easing cycle in late 2021. Interest rate cuts were part of Erdogan’s policy of prioritising growth, investment and low borrowing costs.The inflation surge, to above 85% last year, hit Erdogan’s popularity and polls show him trailing his main challenger. Economists expect a move towards more orthodox policies after the May 14 election.All 21 economists in the poll expect the central bank (CBRT) to keep its benchmark rate steady at 8.5% this week, its last monetary policy committee meeting before the vote.”We expect the CBRT to stay on hold at 8.5%,” JP Morgan said in a note, adding that policy uncertainty for future meetings remained high. After this week’s meeting, the monetary policy committee will next convene on May 25. However the outcome of the presidential election may not become clear until after a potential second round vote on May 28.Turkey’s policy rate was seen rising to 24.0% in the third quarter, medians showed. It was seen rising to 25.0% in the fourth quarter before falling to 16.5% by end-2024.Despite expected interest rate hikes, inflation was seen remaining elevated through the year and falling only to 46.4% at end-2023, the poll found, compared to 50.5% in March. It was seen declining to 28.8% by end-2024 and 19.3% by end-2025.While slashing its policy rate from 19% at the end of 2021, the central bank has said price stability will be achieved when Turkey flips its chronic current account deficit to a surplus.Ankara says this will be achieved through its import-boosting economic plan. But the war in Ukraine and a decline in foreign demand dashed those hopes in 2022.The current account deficit in 2023 is expected to be 4.4% of Turkey’s gross domestic product (GDP), the median showed, compared to a government forecast of 2.5%. The deficit was seen at 3.4% in 2024 and 2.5% in 2025, compared to government predictions published in September of 1.4% and 0.9%, respectively.GDP growth was seen at 2.6% this year, according to the median estimate of 34 economists. The government had forecast growth of 5% before massive earthquakes in February that are expected shave up to 2 percentage points off economic growth.The median growth forecast stood at 3.0% for 2024 and 3.8% for 2025 in the poll, compared to the government’s 5.5% forecast for both years.(For other stories from the Reuters global economic poll:) (Polling by Vijayalakshmi Srinivasan and Prerana Bhat in Bangalore; Writing by Ali Kucukgocmen; Editing by Jonathan Spicer and Christina Fincher) More

Haddad stated that the current leadership of Brazil’s revenue service, under leftist President Luiz Inacio Lula da Silva, believes that this broad disclosure does not violate legal issues.”We are in talks with the solicitor general’s office as we need to specify the tax benefits for each company’s registration,” he told the newspaper.Haddad reiterated that the government wants to reduce tax waivers, estimated at 600 billion reais ($118 billion), by a quarter, or 150 billion reais. He also said he supports a change in the inflation target system, suggesting a “continuous target” rather than the current January-December calendar approach. “At the appropriate time, I believe this issue will be revisited,” he said.($1 = 5.0706 reais) More

LISBON (Reuters) – Trying to lure back wary foreign investors, Brazil’s President Luiz Inacio Lula da Silva vowed on Monday to restore stability and credibility, inviting Portuguese businesses and others to build partnerships with his country’s companies.”Brazil is ready to go back to being a big country,” Lula told business leaders in the northern Portuguese city of Matosinhos. “Brazil is ready to go back to being attractive.”Leftist Lula arrived in Portugal on Friday for a five-day visit, his first to Europe since taking office as president, and is trying to quell investors’ concerns over his ambitious social spending goals.At the event in Matosinhos, also attended by Portugal’s Prime Minister Antonio Costa and other government officials, Lula said that to attract foreign capital, Brazil needed political, social and judicial stability. “Without that, no investor will put money in another country,” he said, criticising former President Jair Bolsonaro for keeping Brazil “isolated from the world” during his four years in office.He said there were opportunities for foreign investment in various sectors, including renewable energy projects, and said Brazil was looking for partnerships, highlighting the deal between Brazilian planemaker Embraer and Portuguese aerospace company OGMA to build NATO-approved aircraft.Both countries’ trade and investment agencies, Portugal’s AICEP and Brazil’s APEX, signed a cooperation agreement.Lula reiterated criticism of Brazil’s interest rate levels, saying that local lending costs were excessively high.”The benchmark rate is at 13.75% now, and nobody borrows money at 13.75%,” Lula said.    Lula and other politicians have pressured the independent central bank to lower rates from their current six-year high but the bank’s governor, Roberto Campos Neto, has defended its actions as technical, “not political”. Lula also reiterated that his administration would not sell public companies.”Brazil in the last six years sold a lot of public assets not to build other assets but just to pay interest on the public debt,” Lula added, particularly criticising the privatisation of power firm Eletrobras.    Latin America’s largest utility, Eletrobras, was privatised in June 2022 by the Bolsonaro administration, when the government diluted its then-controlling stake in the firm in a $6.9 billion share offering. More

Visiting Washington last week, it was striking how commonplace talk of war between the US and China has become. That discussion has been fed by loose-lipped statements from American generals musing about potential dates for the opening of hostilities. Those comments, while unwise, did not spring from nowhere. They are a reflection of the broader discussion on China taking place in Washington — inside and outside government. Many influential people seem to think that a US-China war is not only possible but probable.The rhetoric coming out of Beijing is also bellicose. Last month, Qin Gang, China’s foreign minister, said that “if the US side does not put on the brakes and continues down the wrong path . . . confrontation and conflict” between the two nations is inevitable.As they try to stabilise relations with China, US officials are now looking at the cold war — not as a warning, but as a potential model. Several cite the detente period of the 1970s as an example of strategic stability — in which two hostile superpowers, both armed to the teeth, learnt to live with each other without going to war.Detente was only achieved after going through the dangerous crises of the early cold war. It was after what one US official calls “the near-death experience” of the Cuban missile crisis of 1962 — probably the closest the world has come to all-out nuclear war — that Washington and Moscow recognised the need to stabilise their relationship.A “hotline” was established between the White House and the Kremlin in 1963. The Soviet and American militaries began to talk to each other more regularly in order to dispel fears about military exercises or possible missile attacks. The US has appealed to China to put similar “guardrails” in place to prevent the risk of accidental conflict. Beijing, however, is not keen. The Chinese foreign minister’s comments about the dangers of conflict and confrontation came in the context of an explicit rejection of America’s suggested “guardrails”, which, he said, are just a way of trying to force China “not to respond . . . when slandered or attacked.”The underlying objection from Xi’s government is that the Biden administration is trying to institutionalise US military operations that China regards as fundamentally illegitimate. As the Chinese see it, America has no business promising to defend Taiwan (a rebel province in their view) or conducting freedom of navigation operations in the South China Sea, which Beijing claims almost in its entirety. As one Washington official puts it — “They think our talk of guardrails is like giving a speeding driver a seatbelt.”America, for its part, sees China as the dangerous driver. US officials point to a decades-long Chinese military build-up, including the rapid growth of the country’s arsenal of nuclear weapons. China has also ramped up its military exercises off the coast of Taiwan, which look increasingly like rehearsals for an invasion.America’s assessment of the political and strategic intentions underlying these moves is bleak. US officials believe that Xi Jinping has decided that the “reunification” of mainland China and Taiwan should be the centrepiece of his legacy. They also think he is prepared to use force to secure that goal — and that he has told his military to be ready by 2027. If that is true, putting “guardrails” in place will not be enough to secure the peace. So, as well as trying to restart regular dialogue, the Americans are trying to change Xi’s calculations of the costs and benefits of using military force. That means working with allies to strengthen deterrence in the Indo-Pacific. The Biden administration thinks this is going well. They point to the substantial increases in Japan’s military spending; the signature of the Aukus treaty between the Australia, the UK and the US; the growing closeness of the relationship between Washington and Delhi; the strengthening of the Quad — linking America, India, Japan and Australia; and the Philippines’ decision to allow the US enhanced access to bases near Taiwan. As one US official says with quiet satisfaction: “We’ve been putting a lot of points on the board.”At the same time, the Americans are trying to play down fears that they are seeking to hobble the Chinese economy. The deep economic links between the US and China are one obvious way in which the current rivalries differ from the cold war.Nonetheless, preparations for conflict continue apace on both sides. In this militarised rivalry, one side’s deterrence is another side’s escalation. The obvious risk is that Washington and Beijing are getting locked into a cycle of action and reaction that brings them closer to the brink of direct conflict. That is dangerous in itself. It also makes it increasingly unlikely that Beijing and Washington will co-operate on the global challenges that confront all countries — from preventing the next pandemic, to climate change, to the management of artificial intelligence. The potential military uses of this technology are so dramatic that both Washington and Beijing will be very wary of pooling their knowledge, even if both sides can see the possible risks to humanity from the development of “God-like” AI.The people guiding US policy insist that their long-term goal is the achievement of “strategic stability” with China. It still seems a long way [email protected] More