2026 is becoming a year where global economic balances are tested by geopolitical risks and economic policy uncertainties, while the macroeconomic impacts of artificial intelligence are becoming more visible. While the energy shock complicates disinflation, central banks remain cautious, avoiding overreaction; meanwhile, artificial intelligence investments support growth and equity markets. In Turkey, tight monetary policy, a recovery in reserves, and low public debt protect the macro framework, while energy prices, the current account deficit, and political uncertainties are being closely monitored. The improvement in the sentiment index, which acts as a "perception indicator" regarding Turkey, supports interest in TL assets.
Global economy: Central banks are cautious, artificial intelligence is the new macro variable
Geopolitical risks, monetary policy uncertainty, and artificial intelligence continue to shape the global macro outlook. While the energy shock caused by the US-Iran War pushed growth down and inflation up, it delayed interest rate cut expectations alongside a strong labor market. If the effects of the war remain temporary, the base scenario is for global growth to retreat to around 3 percent and for inflation to return to a disinflationary path in 2027 after a temporary rise in 2026. Central banks will remain cautious, avoiding overreaction as long as inflation expectations remain anchored. While leading indicators show that activity continues with the manufacturing sector fed by front-loaded demand, supply chain pressures and rising input costs increase fragility. Disagreements within the Fed and the new president's policy framework may make monetary policy more controversial. While regional divergence is becoming apparent, inflation in the Eurozone keeps the possibility of an ECB interest rate hike on the table despite weak domestic demand; in China, production provides a limited buffer for global growth despite weak domestic demand.
In the US, as the ratio of private sector technology investments to GDP rises sharply, artificial intelligence has turned into a new macro variable affecting growth, investments, and inflation. With record-low levels in consumer confidence, this picture points to a K-shaped structure in global growth. While low- and middle-income groups are suppressed, wealthy consumer spending and artificial intelligence investments support growth. However, the inflationary impact stemming from data center spending and electricity demand has not yet been fully priced in.
Global financial markets: Pressure from long-term interest rates despite artificial intelligence optimism
Global financial markets are seeking a balance between strong profit growth driven by artificial intelligence and high interest rates. Despite the energy shock and deteriorating inflation expectations, the optimism generated by artificial intelligence investments increases the resilience of stocks. However, the concentration in technology stocks, high valuations, the inflationary pressures that energy demand may create, the risk of supply shocks, and potential mega IPOs necessitate a selective and cautious stance. Due to sticky inflation, resilient growth, high budget deficits, increasing bond supply, Fed independence debates, and expectations of high interest rates for a long time, the room for decline in US 10-year bond yields is limited. Although the Fed's move from an easing bias to a neutral stance and geopolitical risks are supportive of the dollar, high valuations and narrowing interest rate differentials limit the upside potential.
In gold, geopolitical news flow, energy prices, interest rates, and the course of the dollar may create short-term volatility. However, central bank purchases, geopolitical risks, the tendency for reserve diversification, concerns about public debt, and inflation uncertainty keep the structural story for gold strong. A return by the Fed to more dovish communication could also strengthen this outlook. Gold will maintain its role as a diversifier in portfolios.
Turkish economy: Policy framework is maintained despite the energy shock
The pressure created by the US-Iran war through energy prices has made upside risks to inflation and downside risks to growth more prominent. While the rise in inflation is mainly driven by energy and food, the impact of the tight stance has been reflected in goods and services prices. The fact that year-end inflation expectations are approaching 30 percent, the CBRT's revision of its intermediate target to 24 percent, and the policy rate expectation forming around 35 percent indicate that the tight stance will continue with determination for disinflation.
The 0.1 percent quarterly growth in the first quarter also showed the impact of tight financial conditions, and industrial production remained weak. The service sector and private consumption supported growth. While a gradual recovery is expected in the second half of the year, the base scenario is for growth to take shape around 3 percent in 2026. Leading indicators show limited improvement on the production side, but it will be important to see whether the recovery is driven by final demand or restocking. Although the deterioration in the current account deficit due to energy is becoming more pronounced, forecasts are for the current account deficit to remain at manageable levels compared to long-term averages relative to national income in 2026. Although the increase in exports and the slowdown in core imports point to an improvement in foreign trade, the sustainability of this improvement is a question mark. While the course of global demand and tourism are decisive for the current account balance, low public debt, budget performance in line with targets, and the recovery in reserves are positive factors in terms of credit outlook.
Domestic financial markets: Improvement in sentiment indices supports TL assets
Despite rising energy prices, inflation expectations, and political uncertainty, the partial recovery in global risk appetite, the CBRT's tight stance, attractive real interest rates, and the recovery in reserves in recent years have kept TL assets relatively resilient. The recovery in the Turkey sentiment index, generated from positive and negative words used in reports, also indicates that the perception of TL assets has improved despite global and domestic uncertainties. Although the energy-driven inflation pressure, current account outlook, and high global interest rates have somewhat increased cautious rhetoric regarding the TL in reports, tight monetary policy, the recovery in reserves, and the trend of dedollarization are expected to keep interest in the TL alive. On the bond side, short-term fixed-income instruments remain relatively strong due to high real interest rates, while the stickiness in inflation expectations and global interest rate pressure necessitate a cautious stance on long-term bonds. On the Eurobond side, although low public debt, disciplined fiscal policy, and the improvement in reserves are among the positive headings, the global interest rate outlook highlights the need for a selective approach.
Foreign interest in emerging market stocks, relatively attractive valuations, interest rate cut expectations, and positive news flow in foreign relations support domestic stocks; however, high alternative returns in TL, as well as global and domestic political uncertainties, may dampen risk appetite.
Legal Disclaimer: The evaluations and opinions contained in this article are general in nature and do not fall within the scope of investment consultancy.
This content has been translated using artificial intelligence technology.