Keep Us Strong WikiLeaks logo

Currently released so far... 97115 / 251,287

Articles

Browse latest releases

Browse by creation date

Browse by origin

A B C D F G H I J K L M N O P Q R S T U V W Y Z

Browse by tag

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
ETRD EAGR ETTC EAID ECON EFIN ECIN EINV ELAB EAIR ENRG EPET EWWT ECPS EIND EMIN ELTN EC ETMIN EUC EZ ET ELECTIONS ENVR EU EUN EG EINT ER ECONOMICS ES EMS ENIV EEB EN ECE ECOSOC EK ENVIRONMENT EFIS EI EWT ENGRD ECPSN EXIM EIAD ERIN ECPC EDEV ENGY ECTRD EPA ESTH ECCT EINVECON ENGR ERTD EUR EAP EWWC ELTD EL EXIMOPIC EXTERNAL ETRDEC ESCAP ECO EGAD ELNT ECONOMIC ENV ETRN EIAR EUMEM ENRGPARMOTRASENVKGHGPGOVECONTSPLEAID EREL ECOM ECONETRDEAGRJA ETCC ETRG ECONOMY EMED ETR ENERG EITC EFINOECD EURM EENG ERA EXPORT ENRD ECONEINVETRDEFINELABETRDKTDBPGOVOPIC EGEN EBRD EVIN ETRAD ECOWAS EFTA ECONETRDBESPAR EGOVSY EPIN EID ECONENRG EDRC ESENV ETT EB ENER ELTNSNAR ECHEVARRIA ETRC EPIT EDUC ESA EFI ENRGY ESCI EE EAIDXMXAXBXFFR EETC ECIP EIAID EIVN EBEXP ESTN EING EGOV ETRA EPETEIND ELAN ETRDGK EAIDRW ETRDEINVECINPGOVCS EPEC ENVI ELN EAG EPCS EPRT EPTED ETRB EUM EAIDS EFIC EFINECONEAIDUNGAGM EAIDAR ESF EIDN ELAM EDU EV EAIDAF ECN EDA EXBS EINTECPS ENRGTRGYETRDBEXPBTIOSZ EPREL EAC EINVEFIN ETA EAGER EINDIR ECA ECLAC ELAP EITI EUCOM ECONEFINETRDPGOVEAGRPTERKTFNKCRMEAID EARG ELDIN EINVKSCA ENNP EFINECONCS EFINTS ECCP ETC EAIRASECCASCID EINN ETRP EAIDNI EFQ ECOQKPKO EGPHUM EBUD ECONEINVEFINPGOVIZ ENERGY ELB EINDETRD EMI ECONEFIN EIB EURN ETRDEINVTINTCS EIN EFIM ETIO ELAINE EMN EATO EWTR EIPR EINVETC ETTD ETDR EIQ ECONCS EPPD ENRGIZ EISL ESPINOSA ELEC EAIG ESLCO EUREM ENTG ERD EINVECONSENVCSJA EEPET EUNCH ECINECONCS ETRO ETRDECONWTOCS ECUN EFND EPECO EAIRECONRP ERGR ETRDPGOV ECPN ENRGMO EPWR EET EAIS EAGRE EDUARDO EAGRRP EAIDPHUMPRELUG EICN ECONQH EVN EGHG ELBR EINF EAIDHO EENV ETEX ERNG ED
KMDR KPAO KPKO KJUS KCRM KGHG KFRD KWMN KDEM KTFN KHIV KGIC KIDE KSCA KNNP KHUM KIPR KSUM KISL KIRF KCOR KRCM KPAL KWBG KN KS KOMC KSEP KFLU KPWR KTIA KSEO KMPI KHLS KICC KSTH KMCA KVPR KPRM KE KU KZ KFLO KSAF KTIP KTEX KBCT KOCI KOLY KOR KAWC KACT KUNR KTDB KSTC KLIG KSKN KNN KCFE KCIP KGHA KHDP KPOW KUNC KDRL KV KPREL KCRS KPOL KRVC KRIM KGIT KWIR KT KIRC KOMO KRFD KUWAIT KG KFIN KSCI KTFIN KFTN KGOV KPRV KSAC KGIV KCRIM KPIR KSOC KBIO KW KGLB KMWN KPO KFSC KSEAO KSTCPL KSI KPRP KREC KFPC KUNH KCSA KMRS KNDP KR KICCPUR KPPAO KCSY KTBT KCIS KNEP KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG KNNB KGCC KINR KPOP KMFO KENV KNAR KVIR KDRG KDMR KFCE KNAO KDEN KGCN KICA KIMMITT KMCC KLFU KMSG KSEC KUM KCUL KMNP KSMT KCOM KOMCSG KSPR KPMI KRAD KIND KCRP KAUST KWAWC KTER KCHG KRDP KPAS KITA KTSC KPAOPREL KWGB KIRP KJUST KMIG KLAB KTFR KSEI KSTT KAPO KSTS KLSO KWNN KPOA KHSA KNPP KPAONZ KBTS KWWW KY KJRE KPAOKMDRKE KCRCM KSCS KWMNCI KESO KWUN KPLS KIIP KEDEM KPAOY KRIF KGICKS KREF KTRD KFRDSOCIRO KTAO KJU KWMNPHUMPRELKPAOZW KEN KO KNEI KEMR KKIV KEAI KWAC KRCIM KWCI KFIU KWIC KCORR KOMS KNNO KPAI KBWG KTTB KTBD KTIALG KILS KFEM KTDM KESS KNUC KPA KOMCCO KCEM KRCS KWBGSY KNPPIS KNNPMNUC KWN KERG KLTN KALM KCCP KSUMPHUM KREL KGH KLIP KTLA KAWK KWMM KVRP KVRC KAID KSLG KDEMK KX KIF KNPR KCFC KFTFN KTFM KPDD KCERS KMOC KDEMAF KMEPI KEMS KDRM KEPREL KBTR KEDU KNP KIRL KNNR KMPT KISLPINR KTPN KA KJUSTH KPIN KDEV KTDD KAKA KFRP KWNM KTSD KINL KJUSKUNR KWWMN KECF KWBC KPRO KVBL KOM KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG KEDM KFLD KLPM KRGY KNNF KICR KIFR KM KWMNCS KAWS KLAP KPAK KDDG KCGC KID KNSD KMPF KPFO KDP KCMR KRMS KNPT KNNNP KTIAPARM KDTB KNUP KPGOV KNAP KNNC KUK KSRE KREISLER KIVP KQ KTIAEUN KPALAOIS KRM KISLAO KWM KFLOA
PHUM PINR PTER PGOV PREL PREF PL PM PHSA PE PARM PINS PK PUNE PO PALESTINIAN PU PBTS PROP PTBS POL POLI PA PGOVZI POLMIL POLITICAL PARTIES POLM PD POLITICS POLICY PAS PMIL PINT PNAT PV PKO PPOL PERSONS PING PBIO PH PETR PARMS PRES PCON PETERS PRELBR PT PLAB PP PAK PDEM PKPA PSOCI PF PLO PTERM PJUS PSOE PELOSI PROPERTY PGOVPREL PARP PRL PNIR PHUMKPAL PG PREZ PGIC PBOV PAO PKK PROV PHSAK PHUMPREL PROTECTION PGOVBL PSI PRELPK PGOVENRG PUM PRELKPKO PATTY PSOC PRIVATIZATION PRELSP PGOVEAIDUKNOSWGMHUCANLLHFRSPITNZ PMIG PREC PAIGH PROG PSHA PARK PETER POG PHUS PPREL PS PTERPREL PRELPGOV POV PKPO PGOVECON POUS PGOVPRELPHUMPREFSMIGELABEAIDKCRMKWMN PWBG PMAR PREM PAR PNR PRELPGOVEAIDECONEINVBEXPSCULOIIPBTIO PARMIR PGOVGM PHUH PARTM PN PRE PTE PY POLUN PPEL PDOV PGOVSOCI PIRF PGOVPM PBST PRELEVU PGOR PBTSRU PRM PRELKPAOIZ PGVO PERL PGOC PAGR PMIN PHUMR PVIP PPD PGV PRAM PINL PKPAL PTERE PGOF PINO PHAS PODC PRHUM PHUMA PREO PPA PEPFAR PGO PRGOV PAC PRESL PORG PKFK PEPR PRELP PREFA PNG PGOVPHUMKPAO PRELECON PINOCHET PFOR PGOVLO PHUMBA PRELC PREK PHUME PHJM POLINT PGOVPZ PGOVKCRM PGOVE PHALANAGE PARTY PECON PEACE PROCESS PLN PRELSW PAHO PEDRO PRELA PASS PPAO PGPV PNUM PCUL PGGV PSA PGOVSMIGKCRMKWMNPHUMCVISKFRDCA PGIV PRFE POGOV PEL PBT PAMQ PINF PSEPC POSTS PHUMPGOV PVOV PHSAPREL PROLIFERATION PENA PRELTBIOBA PIN PRELL PGOVPTER PHAM PHYTRP PTEL PTERPGOV PHARM PROTESTS PRELAF PKBL PRELKPAO PKNP PARMP PHUML PFOV PERM PUOS PRELGOV PHUMPTER PARAGRAPH PERURENA PBTSEWWT PCI PETROL PINSO PINSCE PQL PEREZ PBS

Browse by classification

Community resources

courage is contagious

Viewing cable 06ANKARA5092, TURKEY: LIMITED IMPACT OF INTEREST RATE HIKES

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs

Understanding cables
Every cable message consists of three parts:
  • The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
  • The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
  • The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
To understand the justification used for the classification of each cable, please use this WikiSource article as reference.

Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #06ANKARA5092.
Reference ID Created Released Classification Origin
06ANKARA5092 2006-09-01 14:20 2011-08-24 01:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Ankara
VZCZCXRO3545
RR RUEHAG RUEHDF RUEHIK RUEHLZ
DE RUEHAK #5092/01 2441420
ZNR UUUUU ZZH
R 011420Z SEP 06
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 8385
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUEHIT/AMCONSUL ISTANBUL 1194
RUEHDA/AMCONSUL ADANA 1055
RUCNMEM/EU MEMBER STATES COLLECTIVE
UNCLAS SECTION 01 OF 02 ANKARA 005092 
 
SIPDIS 
 
TREASURY FOR JROSE 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN TU
SUBJECT: TURKEY: LIMITED IMPACT OF INTEREST RATE HIKES 
 
ANKARA 00005092  001.2 OF 002 
 
 
1.  (SBU)  Summary.  In its August 24 meeting, Turkey's interest 
rate setting Monetary Policy Committee (MPC) decided to keep Central 
Bank interest rates on hold at 17.5%.  Since the global emerging 
market turmoil in May, however, the MPC has increased interest rates 
by a total of 4.25%, reversing the post 2001 financial crisis trend 
that had seen rates decline from 62% in February 2002.  The MPC's 
firm response played a key role in staunching the outflow of foreign 
portfolio investment, stabilizing the exchange rate, and restoring 
some of the policy credibility that had had been lost since Central 
Bank Governor Durmus Yilmaz took over as chairman in April.  Yet, 
observers have argued that the rate hikes and will have a depressing 
effect on real economic activity and growth at a time of increasing 
political sensitivity as 2007 presidential and parliamentary 
elections approach.  While it does seem that GDP growth will slow 
this year and next from the torrid pace of recent years, most local 
economists see a relatively limited impact of the 4.25% increase on 
growth and employment, trimming a percentage point or so off their 
forecasts.  Instead of 5-7% growth this year, growth will probably 
be in the 4-6% range.  Growth will stay positive next year.  End 
Summary. 
 
--------------------------------------------- ---- 
Large Rate Hikes Part of Firm Response to Turmoil 
--------------------------------------------- ---- 
 
2.  (SBU)  After a bumbling its initial response to May's and June's 
market turmoil, the MPC made the decisive decision beginning June 8 
to reverse the downward trend in the Central Bank's policy rates.  A 
cumulative rate increase of 425 basis points and a resumption of the 
Central Bank's daily liraauction intended to extract "excess 
liquidity" from foreign exchange markets seems to have a positive 
impact on markets' inflation expectations and to have stabilized the 
level of the currency, which had hit a low of 1.76 TL to the dollar. 
 The government's commitment to further tighten its fiscal surplus 
under the IMF program also helped reassure that Turkey had not lost 
its inflation-fighting zeal in the run-up to 2007 presidential and 
parliamentary elections. 
 
3.  (SBU)  At the same time, local and foreign economists began to 
worry that the aggressive response to market turmoil would lead to a 
slow-down in the economy through curbed demand and delays in planned 
investment decisions as the cost of money increased.  Indeed, the 
increase in market interest rates charged in the fast-expanding 
consumer loan sector had an immediate impact on consumer demand. 
Banks saw a booming credit card and housing loan growth come to an 
abrupt stop that was also reflected in a drop in domestic automobile 
sales (which was a big part of consumer demand growth).  They 
worried that a spending slowdown could encourage populist political 
responses that would further stir markets. 
 
--------------------------------------------- ----- 
Economists Relaxed, Seeing Continued Strong Growth 
--------------------------------------------- ----- 
 
4.  (SBU)  Yet, most economists who observe the Turkish economy up 
close are sanguine about the impact of the rate hike, even in the 
short-term.  For instance, Hakan Kara, Deputy Director of the 
Central Bank's Research Department, told us that the Bank did not 
see rate hikes having a large negative impact on growth, although he 
agreed that there would be a relative slow-down in consumer and 
business spending.  He noted that part of the real interest rate 
increase would be offset by the increase in inflation expectations. 
Also, he thought that banks were likely to trim their interest rate 
margins and cut rates to spur lending as they accumulated new 
deposits.  He pointed out that changes in banking regulations have 
decreased banks' ability to stash surplus funds in government 
securities, essentially obliging them to absorb increased interest 
costs instead of passing them on to customers. 
 
5.  (SBU)  Another element offsetting a decrease in domestic demand 
would be a spur to external demand coming from the exchange rate 
depreciation.  Most observers, including the Central Bank 
economists, expect this to be seen more in slower import growth than 
an increased rate of export growth.  As noted to us by Central Bank 
Advisor Ercan Turkan, this could lead to industrial cost increases 
and a consequent slow-down in production since Turkey's domestic and 
export industries are heavily dependent on imported inputs. 
However, this has not yet been observed in the industrial production 
or corporate profitability statistics.  Indeed, industrial 
production has surprised many economists with its continued 
strength, surpassing expectations in both June and July.  At the 
same time, a reduction in Turkey's large current account deficit 
should have a positive impact on markets' perceptions of Turkey's 
financial vulnerabilities, theoretically leading to a lower risk 
premium and lower borrowing costs. 
 
------------------------------------------ 
 
ANKARA 00005092  002.2 OF 002 
 
 
GDP Growth Forecasts Trimmed Only Slightly 
------------------------------------------ 
 
6.  (SBU)  There seems to be a consensus that the impact of the rate 
hikes will be felt most in the second half of 2006, when real GDP 
growth rates should fall below the 6.4% annual pace recorded in the 
first half.  As a result, local forecasters seem to have trimmed on 
average about one percentage point off their 2006 outlooks.  So, 
instead of 5-7% growth this year, economists are betting on a 4-6% 
range.  At the low end, Fitch rating agency's local director told us 
her forecast was for 4.5% growth this year, similar to Global 
Securities' Murat Ucer's 4.4% prediction.  Meanwhile, Baturalp 
Candemir, a widely quoted analyst for EFG Securities in Istanbul 
said he is expecting 5.5%.  The Central Bank's Turkan expects growth 
to exceed five percent.  This is a slowdown only when compared to 
last year's 7.4% pace.  All of these economists expect the slowdown 
to continue to be felt in 2007, but with rate hike impact gradually 
diminishing. 
 
--------------------------------------------- --- 
Comment: Markets More Sophisticated About Turkey? 
--------------------------------------------- --- 
 
7.  (SBU) In this troubled region and neighborhood, only the very 
brave forecast economic growth beyond the very short-term.  Still, 
there appears to be a strong consensus that economic growth will 
remain strongly positive in 2006 and 2007 and that the impact of the 
recent rate hikes will be passing.  Indeed, several of the 
economists we spoke to said that risks were "on the upside." 
Nevertheless, Turkey's economic and financial vulnerabilities 
remain including its large current account deficit and still 
substantial foreign-currency linked government debt that leave the 
country especially exposed to swings in global markets. 
Interestingly, however, a senior London-based Goldman Sachs Turkey 
watcher told us he saw markets growing more sophisticated in their 
approach to political risk in Turkey.  He did not see major market 
fluctuations resulting from the inevitable political uncertainties 
in a pre-election period.  He thought this was due both to greater 
sophistication by investors as well as greater sensitivity of 
policymakers to the impact their comments have on markets.  The 
recent smooth transition in the military command structure was, he 
thought, evidence of this. 
Wilson