Turkish Central Bank Raises Inflation Forecast for 2025

Economic

Summary:

Türkiye’s Central Bank on Friday raised its year-end inflation forecast for 2025 while keeping it unchanged for 2026

Annual consumer inflation is expected to reach 24% this year, up 3 percentage points from the previous forecast, Governor Fatih Karahan told a meeting held to release the bank’s first inflation report of this year. 

"The forecast revision for 2025 was driven by factors that are relatively beyond the control of monetary policy," Karahan said.

The leading factors were a higher weight for the services group in the Consumer Prices Index (CPI) basket, the update in food inflation due to the unprocessed food and the increase in co-payment by patients’ shares in medical examinations, he explained.

Despite the revision, the governor highlighted that this adjustment does not indicate any easing of its monetary policy stance.

"Hence, we kept our 2026 forecast unchanged within a context where the probable secondary effects of the revision in our 2025 forecast through expectations will be offset by the tight monetary stance," he said.

The forecast for 2026 was kept unchanged at 12%, Karahan said, adding: "We forecast inflation will ease to 8% by 2027,” with the long-term goal being to stabilize inflation at 5%.

The governor reaffirmed the Central Bank’s commitment to its disinflation strategy, highlighting measures such as maintaining tight financial conditions, encouraging moderation in domestic demand, and fostering the real appreciation of the Turkish lira. 

According to recent data from TurkStat, Türkiye's annual inflation rate dropped to a 19-month low of 42.12% in January with the disinflation process started last January. 

Karahan also underlined the importance of policy coordination, saying: "The decline in the underlying inflation will continue in 2025 as the stickiness in services inflation weakens and the improvement in inflation expectations become more pronounced. The coordination between monetary and fiscal policies will contribute to the disinflation process as well."

The Central Bank vowed to maintain its tight monetary policy stance until a sustained decline in inflation is achieved, ensuring price stability over the long term.

Source:AA

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Alex

Economic

The U.S. House of Representatives speaker said on Sunday he would stick with a "one big bill" strategy to pass President Donald Trump's tax-cut agenda and fund border and military priorities, despite a limited $340 billion budget plan unveiled on Friday by Senate Republicans.

Mike Johnson told Fox News Sunday that it will take some time to secure a Republican consensus because of the party's thin House majority. But they would find savings to offset the cost of extending 2017 tax cuts that are due to expire at the end of the year and other priorities such as eliminating taxes on tips.

Senate Budget Committee Chairman Lindsey Graham unveiled a plan on Friday that would boost funding by $85.5 billion for four years for border security, deportations of migrants and for the military, leaving the extension of tax cuts to another bill later this year.

"Well, I talk with the president and his team about this almost constantly, reminding them that we will get the job done, but it has to be the one big bill strategy," Johnson said.

Johnson said the House Budget Committee had previously planned to consider the Republican budget resolution next week, but "we might push it a little bit further because the details really matter."

He said he needs to secure agreement among all House Republicans, who hold a razor-thin 218-215 majority in the chamber. The party plans to use a budget procedure that would allow them to pass fiscal legislation with only a simple Senate majority without any Democratic votes, so he cannot afford to lose more than one Republican vote.

Budget forecasters estimate that extending current individual tax rates would cost more than $4 trillion over a decade, with some estimates topping $11 trillion for Trump's full tax agenda.

Johnson said House Republicans are looking for offsetting savings and do not want to add to federal deficits.

"We're going to make sure that we find the offsets to do this in a responsible manner," Johnson said.

Source: Theedgemarkets

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Alex

Economic

New Zealand is simplifying its so-called “golden visa” programme, including removing an English language requirement, to attract wealthy immigrants and help spark an economic recovery.

From April 1, the Active Investor Plus visa will be narrowed to just two categories, while the scope of acceptable investments will be expanded, Immigration Minister Erica Stanford said Sunday in Auckland. As well as dropping the language test, other potential barriers to investment such as the amount of time investors must stay in the country will also be adjusted, she said.

After a sharp recession in 2024, the New Zealand government wants to capitalise on falling interest rates to lift economic performance but has acknowledged it lacks the necessary capital. It has started reworking foreign investment regulations, created a single agency to act as a one-stop shop for overseas fund managers and eased rules to allow visitors to work remotely, hoping that might encourage highly skilled people to relocate permanently.

“Capital is highly mobile and in an increasing complex world, people are looking for a safe and stable country to do business,” Stanford said. “We are now making our investor visa simpler and more flexible to incentivise investors to choose New Zealand as a destination.”

The Active Investor Plus visa was successful at luring rich individuals to New Zealand and raked in an average NZ$1 billion (US$570 million or RM2.53 billion) a year, but has languished after rule changes in late 2022.

Just 43 applications have been fully approved since those adjustments were made, equating to NZ$545 million of nominated investment funds, according to data from Immigration New Zealand. The actual amount of money coming across the border was significantly less, the government said today.

The new programme will have two categories:

Growth, or higher risk, requiring a minimum investment of NZ$5 million over three years either directly into businesses or into managed funds; visa holders must spend just 21 days in the country

Balanced, or mixed risk, requiring a minimum of NZ$10 million invested over five years into bonds, stocks, new property development including residential, or existing commercial and industrial property; holders must spend at least 105 days in the country but can reduce the period by investing above the minimum

By offering an option for low-risk investors the programme will be attractive to a wider group of people, rather than just focusing on those with a high risk appetite, Stanford said, adding there is already of a large amount of interest from applicants that had been generated during consultations with the industry.

New Zealand’s easing of its investor visa rules comes at a time when many other nations are ending theirs. Spain will end its golden visa programme on April 3, while the UK, Ireland, the Netherlands, Greece and Malta have either ended or tightened the rules around their golden visa or equivalent policies.

The Australian government has effectively scrapped its Significant Investor visa class — which was available for arrivals who invested more than A$5 million (US$3 million or RM14 million) — over concerns that it had been abused by wealthy individuals who had used it to buy property or financial assets without contributing significantly to productive parts of the economy.

Marcus Beveridge, a business migration specialist and managing director at Queen City Law in Auckland, welcomed the changes as being well over due, and predicted they will give New Zealand’s sluggish residential property market a shot in the arm.

“Over the last couple of decades every time we do something like this the property market picks up,” he said. “It’s not so much about huge numbers coming across the border but what happens is that the cash investment primes the pumps and our local market takes off.”

Source: Theedgemarkets

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Justin

Economic

Malaysia’s jobless rate fell to its lowest in nearly a decade at the end of 2024 as the number of people employed outpaced the expansion in the labour force, official data on Monday showed.

Unemployment rate in December was down to 3.1%, the lowest since May 2015, according to a statement from the Department of Statistics Malaysia. Economists generally consider a 3% unemployment rate as the economy having full employment.

During the month, 544,300 individuals were unemployed versus 546,700 people in November.

“The anticipation for Malaysia's labour force in 2025 is comparatively favourable, whereby employment was observed to rise consistently, while unemployment is expected to remain low,” said chief statistician Datuk Seri Dr Mohd Uzir Mahidin.

Key sectors such as manufacturing particularly electrical and electronics, and services will propel job creation, he said.

The labour force in December expanded 0.1% to 17.32 million persons, with labour force participation rate inching up 0.1 percentage point to 70.6%.

The employee category, comprising the large majority of the workforce, saw a 0.1% increase to 12.56 million persons. Own-account workers — people who operate their own farm or business, or engage in full-time trade without hiring paid employees — also gained 0.4% to 3.12 million persons.

By sectors, employment in the services sector continued to increase, mainly in wholesale and retail trade; art, entertainment and recreation; and accommodation and food-and-beverage services. The manufacturing, construction and agriculture sectors also reported employment growth.

However, employment in the mining and quarrying sector decreased during the month.

In terms of age groups, unemployment for people between 15 and 24 years old — those just entering the labour market following education — inched 0.1 percentage point lower to 10.3% or slightly under 300,000 youths.

Source: Theedgemarkets

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Owen Li

Economic

The beginning of 2025 marks a new chapter in the relationship between Russia and Europe. On December 31, 2024, Russian gas exports via Soviet-era pipelines traversing Ukraine were halted. This followed Kyiv’s decision not to renew the transit agreement with Gazprom, the Russian state-owned gas giant, and its own Naftogaz. Ukrainian President Volodymyr Zelenskiy stated that his country would not allow Russia to “earn additional billions on our blood.” This agreement, which was signed on December 31, 2019, allowed Russian gas to transit through Ukrainian territory to reach European customers.

Despite the halt in gas exports, no wave of European panic followed – an unimaginable scenario only a few years ago when any dispute between Russia and Ukraine threatening gas supplies to Europe would have caused a major outcry across the continent, sending gas prices skyrocketing. This time, Europe was better prepared. However, attributing this outcome solely to the ingenuity and efforts of Brussels would be an oversimplification. Various external developments have come together, reinforcing each other and significantly bolstering Europe’s determination to break free from the decades-long Russian grip on its energy market.

Consequently, since the beginning of this century, the European Commission has made the security of gas supply an explicit policy objective. This involves identifying and building new routes that reduce European Union countries’ dependence on a “single supplier” of natural gas and other energy resources.

Russia was the single supplier. Efforts to diversify from this reliance progressed at different paces, but in recent years, they gained momentum with the expansion of the liquefied natural gas (LNG) seaborne trade. This shift coincided with and significantly benefited from the shale oil and gas revolution in the United States, which transformed the U.S. from an EU competitor for global gas supplies to a strategic alternative to Russian supplies.

In just a few years, the U.S. became the world’s largest LNG exporter, capturing market share from traditional suppliers, particularly Russia, in the European market. In response, established and new gas producers have increased their efforts to expand export capacity to protect their market share. This increased competition comes at a time when the energy transition and the rise of green energy threaten the growth potential of gas markets – and may even lead to their decline.

The gas market, which Russia once dominated, has fundamentally changed. Even if a peace deal is reached soon between Russia and Ukraine, it is highly unlikely that Russian gas will reclaim its former hegemony.

Bypassing Ukraine

Russia is the world’s second-largest exporter of natural gas after the U.S. However, Russia had the lead in gas exports through pipelines, boasting an extensive network that largely serves its traditional main market: Europe.

For decades, Russia was Europe’s largest natural gas supplier. In 2000, it accounted for a staggering 85 percent of total gas imports to Europe via pipelines and 74 percent of total imports. This overwhelming dominance went largely unchallenged until recently, although European countries were aware of the risks associated with such heavy reliance on Russian gas and many began taking steps to reduce this dependency, at varying rates.

After Russia’s full-scale invasion of Ukraine in 2022, Europe successfully reduced its reliance on its primary supplier. By 2023, the share of Russian pipeline gas in Europe shrank to 45 percent of total gas pipeline imports into the continent, while its total contribution to European gas imports reached 25 percent (including LNG, where Russia accounted for 7 percent of imports).

The gas interdependence between the EU and Russia was a double-edged sword. While Russia was Europe’s largest gas supplier, the continent was also Moscow’s largest market, with Germany alone accounting for more than half of the Russian pipeline gas exports. This dependence was not solely the result of geographical proximity. The natural peculiarity of pipeline transport limited the options for diversification for producers and consumers. Typically, they would enter a long-term contract with rather rigid terms of trade that remained unchanged throughout the duration of the agreement.

To strengthen its presence in its main market while reducing its exposure to one main transit route – namely Ukraine and primarily via the Soviet-era Urengoy-Pomary-Uzhgorod pipeline, also known as the Brotherhood pipeline, which became operational in 1983 – Russia has invested in a web of pipelines over the past two decades. This included the Blue Stream pipeline beneath the Black Sea to Turkey, which started in 2003; the Yamal-Europe pipeline traversing Poland and Germany via Belarus that became operational in 2006; the Minsk-Kaliningrad pipeline through Belarus and Lithuania, operational since 2011; Nord Stream 1 under the Baltic Sea to Germany, commissioned in 2011 and the TurkStream pipeline extending to southern Europe, which commenced in 2020. Additionally, the Nord Stream 2 pipeline under the Baltic Sea to Germany, which was completed in September 2021, was built but never commissioned due to the Russia-Ukraine conflict.

With new pipelines, Ukraine’s share of Russian gas exports to Europe would have dropped to 13 percent, down from over 90 percent in the early 1990s. If the planned pipelines – TurkStream 3 and 4 – were also built, supplying gas to Southern Europe via Turkey, Ukraine’s transit business would have disappeared entirely. This scenario made strong commercial sense for Russia and had favorable political implications.

However, the sabotage of Nord Stream 1 and 2, which had the highest capacity for exporting pipeline gas from Russia to Europe, and Poland’s suspension of flows through the Yamal pipeline in 2022, derailed Russia’s ambitions. Dethroning Russia’S Gas Hegemony_1

LNG to the rescue

Fortunately for Europe, the disruptions to the pipeline trade with Russia happened during an era of fundamental change in the global gas trade. Norway has certainly captured some of Russia’s lost market share in the European gas pipeline sector.

Nevertheless, seaborne LNG has made the biggest difference. Globally, between 2011 and 2021, interregional LNG trade grew more than four times faster than pipeline trade. In 2020, the volume of gas traded as LNG surpassed that of pipeline deliveries for the first time.

LNG exporting and importing terminals have rapidly expanded worldwide, including in Europe. Germany, for instance, which relied solely on pipeline gas imports until 2022, swiftly constructed LNG importing facilities and secured long-term deals with major exporters like Qatar. Neighboring Poland opened its first LNG terminal in 2016 and has just completed an expansion of the facility, significantly bolstering the country’s throughput.

The shale revolution has significantly transformed the U.S. energy landscape by unlocking vast resources of natural gas. As a result, the U.S. has quickly ramped up its production and emerged as the leading LNG exporter globally. In 2023, it also became the largest supplier of LNG to Europe, accounting for 45 percent of the continent’s total LNG imports. A key feature of U.S. LNG is that it is typically sold at spot market prices and is not tied to long-term contracts, as is the case with other major gas exporters, like Qatar. This flexibility allows U.S. suppliers to rapidly adapt to changes in market conditions, such as a rise in demand.

This increase in U.S. LNG imports allows Europe to diversify its energy sources significantly. In response, the EU has set an ambitious goal to completely phase out Russian gas imports by 2027. Although this goal is not legally binding, such a scenario could not have been envisaged just a few years ago. Dethroning Russia’S Gas Hegemony_2

The evolving landscape of Europe’s gas supplies has come at a significant cost. Natural gas prices remain higher than the historical averages seen before 2022, but they are now a fraction of the peak prices reached in the summer of 2022 just after Russia’s war in Ukraine started. These elevated prices also attracted LNG, particularly from the U.S., to Europe, leading to a relatively swift resolution to the crisis.

Russia’s challenges in the LNG market

Russia has tried to capitalize on the expansion of LNG as another strategy to bypass Ukraine and safeguard its market position in Europe in light of the growing threat from the U.S. LNG not only offers customers greater flexibility and optionality, producers also benefit. Shifting from pipeline to LNG exports would provide Russia with enhanced flexibility, allowing it to free itself from the inherent limited optionality and transit headaches of pipelines.

To facilitate the expansion of its LNG trade, a law on LNG export liberalization came into force in Russia on December 1, 2013. This law allowed companies other than Gazprom (and its subsidiaries), which maintained a monopoly on pipeline gas exports, to export LNG. Despite the changes, the companies benefitting were predominantly government-backed or controlled entities. More recently, several Russian LNG projects have come onstream. Although the country’s LNG exports are still small compared to its traditional pipeline business, it now accounts for 31 percent of total exports of Russian gas in 2023, up from 20 percent two years earlier. Dethroning Russia’S Gas Hegemony_3

While most of Russia’s pipeline gas supply to the EU was disrupted following the Ukraine war, LNG deliveries from Russia to Europe increased. In 2024, nearly 70 percent of Russian LNG reached Europe, accounting for nearly 17 percent of European LNG imports, compared to 12 percent in 2023.

Russia is currently the fourth-largest LNG exporter after the U.S., Qatar and Australia. Due to its relatively low cost, large resource base and geographical positioning, Russian LNG has the potential to be among the most profitable LNG on global markets. Nevertheless, its outlook will be determined by the sanctions regime.

Before the war in Ukraine, Russia was poised to significantly expand its LNG export capacity. However, sanctions imposed by the U.S. and the EU, particularly those targeting LNG, have dampened those prospects. The measures, which were mostly imposed in response to Russia’s invasion of Ukraine, came on top of restrictions put in place after Moscow annexed Crimea in 2014, which had already limited its access to advanced LNG technologies.

While the 2014 sanctions had a limited effect, the Russian government supported the development of domestically produced LNG export technology. This was a key part of its roadmap to localize critical energy equipment necessary for mid- and large-scale LNG projects. Despite that, the recent and more comprehensive sanctions significantly restrict Russia’s long-term LNG ambitions. It is therefore unrealistic to expect the bulk of Russia’s LNG projects – especially the larger ones – to materialize in the near future.

Developing LNG technologies and infrastructure requires substantial investment, which is challenging without access to Western financing and technology. A prime example are the recent delays and setbacks the Arctic LNG 2 project has faced. Led by Russia’s largest independent gas producer, Novatek, the project has an annual design capacity of 19.8 million tons per annum (mtpa). Yet, so far, only one train, able to produce 6.6 mtpa, is operational.

“Our goal is to ensure that Arctic LNG 2 is dead in the water. … We’re very focused on ensuring that Russia is not able to develop new projects in order to redirect the gas that it had previously sent into Europe,” Geoffrey Pyatt, former U.S. Assistant Secretary of State for Energy Resources, said last year. Russia condemns the sanctions, unsurprisingly, and attempts to cast the U.S. as the aggressor. Dethroning Russia’S Gas Hegemony_4

Pursuing new avenues in Asia

Russia has also pursued opportunities in another key market: Asia, particularly China, where gas demand is growing faster than in Europe. Currently, Asia consumes 32 percent of total Russian gas exports, of which 73 percent goes to China. These shares are expected to increase in the coming years.

The Power of Siberia 1 is currently Russia’s only direct operational pipeline to the Asian market. It was agreed upon in 2014 and began operations in 2019. It connects Russia’s far-east gas fields to China. In this respect, the gas exported through this route does not compete with the gas sent to Europe, which comes from gas fields in West Siberia.

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In February 2022, Russia announced a more strategic project: the Power of Siberia 2 pipeline. Under a 30-year contract, it is expected to be operational in 2030. However, the agreement has yet to be finalized, and there have been reports of construction delays that may push back its launch date even further.

If completed, the Power of Siberia 2 pipeline would allow Russia to offset its gas exports to Europe. The pipeline would supply gas from the West Siberian gas fields to China via Mongolia. Thus, the pipeline would theoretically give Russia the flexibility to direct gas flow either to the West or the East.

The reality, however, is more complicated. Constructing the Power of Siberia 1 took more than a decade, while the Power of Siberia 2 is expected to take more than twice that time due to its extensive length and diplomatic complications of the pipeline passing through a third country. By the time the project is finished, the gas market landscape will likely look different. Furthermore, China’s position as the sole buyer of Russian pipeline gas to Asia leaves Moscow in a weaker bargaining position.

Russia's natural gas landscape

Russia sits on the world’s largest proven gas reserves (20%) and is the second-largest producer and consumer after the U.S.The oldest major pipeline from Russia to Europe is the Urengoy-Pomary-Uzhgorod pipeline, also known as the Brotherhood pipeline, via Ukraine. It became operational in 1983.In 2023, China became the biggest buyer of Russian LNG.The U.S. produces over 1.7 times more natural gas than Russia.In 2023, Russia sent 21.3 billion cubic meters (bcm) of gas to China via the Power of Siberia 1 pipeline, but it is expected to ramp up its export to 38 bcm (reaching the pipeline’s annual design capacity) by 2025.

In contrast, China has various supply options, including domestic production and imports from Central Asia, East Asia and LNG sources such as the U.S., Australia and Qatar, which aim to significantly expand their export capacity in the coming years. Moreover, China’s energy security objectives focus on having a diversified import portfolio.

In this respect, Russia’s choice between a troubled Europe and a sole buyer in China is less than ideal. Furthermore, compared to other established exporters in the region, Russia is a relative newcomer entering an already busy market.

Unlikely: Russia reclaims its dominance in the European gas market

Russia is rich in natural gas resources and is a major global supplier. This holds true even though the country has faced several rounds of sanctions aimed at its energy sector since 2014, which have only become more severe following its war in Ukraine. If these sanctions were to be lifted, Russia could find a way to reclaim its former markets in Europe while continuing its efforts in Asia. Such a scenario, however, is unlikely.

Likely: The decline of Russian gas hegemony in a competitive market

Considering the evolving landscape of regional and global gas trade, it is increasingly clear that Russian gas is unlikely to reclaim its former hegemony. Competition has intensified, not only from established LNG producers but also from emerging alternative energy sources, particularly green energy.

Moreover, while Moscow pivots toward Asia, particularly to China, rising demand in that region is unlikely to significantly improve Russia’s prospects. Any shift in focus to the Asian market hinges heavily on China’s energy security and pricing strategies, and Beijing’s approach to addressing climate change challenges.

Thus, given these factors, the most plausible scenario for the future is the decline of Russian gas hegemony in favor of a more competitive market landscape.

Source:gis reports online

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Owen Li

Economic

Naftogaz Group, Ukraine’s state-owned producer, has seen its gas output down by one third recently, due to the air strikes with missiles from Russia, according to Bloomberg’s sources.

So Ukraine now needs to import about 1 billion cubic meters of gas, they added.

Russia has been targeting – and hitting – energy infrastructure in Ukraine since the beginning of the invasion in February 2022. Air strikes become more aggressive and frequent during the winter when Ukraine needs more gas and all other sources of energy to keep heating and lights on.

In one of the latest attacks this past weekend, Russia attacked residential buildings and infrastructure with missiles and drones, killing 15 people and damaging energy infrastructure in Poltava, around 120 kilometers (75 miles) from the Russian border.

Last year, Naftogaz Group raised its commercial gas production to 13.9 bcm, up from 13.2 bcm in the previous year, the Ukrainian state-owned firm said in January.

“Each day, our team demonstrates resilience and adaptability, driving progress even under the toughest conditions,” said CEO Roman Chumak.

Later in January, Naftogaz said that it has sufficient gas reserves for a stable heating season.

“We are closely monitoring gas reserves, which will be sufficient to ensure a stable heating season. Our top priority is to provide comfort and warmth to Ukrainian households,” Chumak commented.

“Additionally, Naftogaz Group continues to import fuel to remain fully prepared amid the war.”

Naftogaz is also creating various scenarios in cooperation with international partners to strengthen Ukraine’s energy resilience and address today’s wartime realities.

On Friday, Naftogaz Group and the European Bank for Reconstruction and Development (EBRD) discussed potential financing for natural gas purchases and support for domestic production amid the ongoing Russian attacks on Ukraine’s energy and gas asset infrastructure.

Source:oil price

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Justin

Economic

Korean Economy Faces Growing Downside Risks From Global Tariff War: KDI_1

Korea's economy is faced with increased downside risks due to an anticipated global trade war centered around the United States, while production remains modest amid a prolonged slump in the construction sector, a state-run economic think tank said Monday.

"Recently, our economy has seen a modest growth in production while worsening external conditions have heightened downside risks," the Korea Development Institute (KDI) said in a monthly economic assessment report.

The KDI cited heightened concerns over the latest U.S. tariff policies.

U.S. President Donald Trump, who began his second term last month, has announced plans to impose steep tariffs on major trading partners in his efforts to address America's trade deficits and achieve other policy goals.

The think tank noted that Korea's manufacturing sector has modestly improved, driven by strong semiconductor and automobile production, but the construction sector continues to decline.

"Domestic demand recovery, particularly in consumption and construction investment, has been delayed, and the strong export growth is gradually slowing down, except in the semiconductor sector," the KDI said.

According to government data, Korea's exports, one of its key economic growth engines, declined in January for the first time in 16 months.

The KDI also pointed to weakening retail consumption and rising delinquency rates among small business owners as additional concerns.