Country Insights

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Fed, two summits and many prayers
TURKEY - Report 15 Sep 2019
Fed FOMC decision and President Erdogan’s summits first with Rouhani and Putin, then with Trump at the sidelines of the UN opening ceremony will set the country risk premium for autumn. There are very low odds for Erdogan convincing Moscow and Tehran to turn over the northern part of the rebel pr...

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​MPC cuts more than expected, less than feared
TURKEY - In Brief 12 Sep 2019
The Monetary Policy Committee lowered the policy rate (one-week repo rate) by 325 bps today to 16.5%, about 50-75 bps more than the median expectations (of 250-275 bps cut), but this was, in effect, a compromise move of sorts because the magnitude of the cut was less than feared (350+ bps) by mos...

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Ready for more political turbulence?
TURKEY - Report 08 Sep 2019
The politics author wishes to warn the audience that President Erdogan may be on the war path to secure his political future, which will entail crackdowns on opposition and further tensions with the West. This prophecy bodes ill for economic and investor confidence. Why is Erdogan striking back? ...

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All set now for a substantial rate cut
TURKEY - In Brief 03 Sep 2019 1 response
Consumer price inflation came in at 0.86%, m/m, in August, which was notably lower than the consensus and our forecast of 1.3%. As a result, 12-month rate declined more than expected to 15% from 16.6% in July. Likewise, producer prices fell in the month by 0.6%, taking the 12-month rate sharply l...

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Consumer saves the quarter, relatively speaking
TURKEY - In Brief 02 Sep 2019
The Turkish economy contracted by 1.5%, y/y, in the second quarter of the year (1.4%, WDA), which was less steep than both the consensus and our forecast had it. As a corollary, quarterly (or sequential) growth, at 1.2%, was also markedly better than our forecast (Graph 1). The key driver of our ...

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The month of Syria
TURKEY - Report 01 Sep 2019
Ankara is in trouble in Syria once again. This time it is different, because Erdogan can get along neither with Putin, nor the US (ex-Trump). Bad-case scenarios such as sanctions, clashes with Kurds and Assad’s Army in Idlib dominate our crystal ball. At home, Erdogan is feeling the pressure f...

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​New risks loom large: HDP mayors and Idlib clashes
TURKEY - In Brief 21 Aug 2019
In our Monthly Report, I‘d written that Turkey’s risk topography changes every day like kaleidoscope, but the sum total hardly moves. Two new tail-risks emerged on the horizon about which I wish to warn our readers, before I tell the tales. First, it is no longer inconceivable that Turkish and Sy...

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Under pressure
TURKEY - Report 18 Aug 2019 1 response
Turkey’s political risks shift quickly, but the sum-total never declines. Erdogan administration survived the summer without a disaster by swapping one threat for another. Alas, it wasted very precious time on structural reform and fiscal austerity, dithering on how to end AKP’s decline in popula...

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​East of Euphrates: Is it settled now?
TURKEY - In Brief 08 Aug 2019
It has long been one of my most tiring mottos that “Turkey can’t pull out of Syria”, because surrendering the neighbor to Assad and PKK-affiliated Kurdish entity YPG-PYD would earnestly create problems of survival in the long run. At the very least, the nearly 4 million strong Syrian refugee popu...

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July inflation: up for technical reasons
TURKEY - In Brief 05 Aug 2019
Consumer prices rose by 1.4%, m/m, in July lower than the consensus (1.6%) and our even somewhat higher forecast, but the 12-month rate nevertheless increased to 16.6%, from 15.7% in June because of administrative price hikes and tax adjustments, which, incidentally, marked the first increase sin...

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The Riddle of the Reasonable Real Rate of Return
TURKEY - In Brief 01 Aug 2019
The CBRT released the year's third Inflation Report yesterday. I am, in theory, on holiday, so I missed the presentation by Governor Murat Uysal and the Q&A that followed it. Now that I have read the speech, which is available verbatim on the CBRT site, and watched the Q&A, I wanted to share a fe...

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Sweet dreams are made of this
TURKEY - Forecast 28 Jul 2019
Fed’s dovish pivot, ‘constructive ambiguity’ around the S-400 tensions between Turkey and the US, and last but certainly not least, the usual market complacency gave Turkish assets a fairly unexpected boost lately. Since our last quarterly report (of May 10, 2019), Turkey’s risk premium (CDS) has...

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​CBRT opens up easing round with 425 pips
TURKEY - In Brief 25 Jul 2019
As our economics guru Dr Murat Ucer is in transit, his acolyte Atilla Yesilada is reporting on CBRT MPC decision. It may have surprised the participants in sundry polls which anticipated 200-250 basis point rate cut, but didn’t surprise us (we penciled in 300-350, with an upside bias), when CBRT ...

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​Hotel Transition at Crossroads
TURKEY - In Brief 24 Jul 2019 1 response
Our muses permitting, in a few days, the Global Source Partners Turkey team will issue its flagship Quarterly Report. By its very design the Quarterly is concise and forward-looking. The humble Politics Author felt the need to explain his view of the coming 12 monthsin detail to make sure nothing...

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The week of the “400s”
TURKEY - Report 21 Jul 2019
Turkey is formally expelled from the F-35 fighter jet program, but insists on deploying S-400s, largely because Trump demurs at substantive sanctions. This week the visit of a high-level US delegation to Ankara and Trump’s meeting with the US Senators could reshape the crisis. Politics section...