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COUNTRY INSIGHTS

Consumer (and construction) drives Q1 growth
TURKEY · Report · 11 Jun 2018

The Turkish economy grew at a somewhat higher than expected 7.4% rate, y/y, in Q1 (2%, q/q), which was primarily driven by a surge in private consumption. The latter expanded at a whopping 11% rate (4.2%, q/q), driven by non-durable consumption and services (Table 1; Graphs 1-3). More broadly,...

Running scared, recession underway
TURKEY · Report · 10 Jun 2018

A number of recent polls add weight to our call of President Erdogan winning the race in the second round, as we declare CHP candidate Mr. Ince his potential rival. Assuming pro-Kurdish HDP passes the qualifying hurdle, opposition parties should gain control of the Grand Assembly. A spate of rash...

Until March 2019: From here to eternity
TURKEY · Presentation · 08 Jun 2018

The CBRT’s latest move avoided the worst but more needs to be done as the global backdrop deteriorates for high-CAD, high F/X debt countries such as Turkey. But until Turkey’s election cycle ends, with the March 2019 local elections, substantial corrective policy action is difficult to imagine.

MPC delivers more than expected
TURKEY · Report · 07 Jun 2018

At today's regular meeting, the Monetary Policy Committee hiked the one-week repo rate (policy rate) — and along with it all other rates — by 125 basis points (bps), which was notably higher than the market expectations of around 50 bps. In terms of the content of the statement, the CBRT ackno...

Inflation rises further, eyes on MPC
TURKEY · In Brief · 04 Jun 2018

May CPI inflation came in at 1.6%, m/m, somewhat higher than the consensus expectation of 1.4%-1.5%, reflecting a myriad of mainly cost-push factors, such as lira depreciation, higher oil prices and the Ramadan effect on food prices. The 12-month CPI rate rose sharply higher to 12.1%, y/y, from 1...

Is regime change possible?
TURKEY · Report · 01 Jun 2018 · 1 response

Turkey’s ordeal with political risks is not over. At the very tail-end, postponement of elections still lurks behind. ‘Cohabitation’ is the most likely outcome on June 24th, after which time Erdogan and the opposition controlled Grand Assembly are likely to bicker on many topics, but agree on eve...

CBRT simplifies monetary policy
TURKEY · In Brief · 28 May 2018 · 1 response

The CBRT has made public today what was promised at a closed-door meeting with bankers last night, and simplified the monetary policy framework. In a short announcement, the CBRT said that one-week repo rate will be the policy rate, which will be equal to the current funding rate (of 16.50%), and...

New storms approaching
TURKEY · Report · 27 May 2018 · 1 response

In this week’s report, the Political Analyst and his Doppelganger Cosmic Strategist joined forces to place upcoming events in a market perspective, saving detailed analysis of political fundamentals for the Monthly Report we plan to publish during the week. We argue that the current calm in th...

Muddle-through, it is
TURKEY · In Brief · 24 May 2018

I am writing this note to augment Dr. Murat Ucer’s commentary on CBRT action, titled “CBRT Finally Acts, Avoids the Worst – For Now”.Our audience should recall, that Murat and I have now focused our combined energies on forecasting two variables: Can Turkey survive the period between now and Marc...

​CBRT Finally Acts, Avoids the Worst – For Now
TURKEY · In Brief · 23 May 2018

At an emergency interim meeting held this evening in Ankara, the CBRT’s Monetary Policy Committee raised the Late Liquidity Window (LLW) rate – which has been the de facto policy rate -- by 300 bps to 16.5%, from 13.5%, leaving all other rates unchanged (Graph 1). In its brief statement, the Bank...

LAST MINUTE: CBRT capitulates, hikes rates
TURKEY · In Brief · 23 May 2018

CBRT MPC just finished an extrordinary meeting, announcing a 300 basis point hike to the ceiling of the Late Liquidity Windom financing rate. Our team will issue a detailed post-mortem after consultations, but needless to say this action validates to some extent the muddle through scenario we emp...

How will all this end? A first stab
TURKEY · Report · 20 May 2018

Last week’s developments compelled us to share our thoughts and views on Turkey’s rapidly changing political and economic outlook. As a result, we have opted for a different format in this Weekly Trends, in the first section of which, we ventured to construct a tentative baseline scenario thro...

Correction
TURKEY · In Brief · 16 May 2018

In my market brief of this morning I've inadvertedly promoted Mr Hakan Atilla to the position of CEO of Halkbank. He was deputy CEO or Assistant GM of the said bank, prior ot his arrest.Apologies Atilla Yesilada

​The import of Erdogan’s Bloomberg interview
TURKEY · In Brief · 15 May 2018

Tuesday’s panic attack in TL assets is now a world-leading story, which deserves little description. I also agree with the view that it is largely to be blamed on Erdogan’s controversial comments regarding interest rates, CBRT and the Hakan Atilla-cum-Halkbank case in the US. I am writing this pe...

Dark tunnels, approaching lights
TURKEY · Report · 13 May 2018

With six candidates certified to contest the election, Erdogan remains our favorite to win in the second round. Yet, a new trick by the opposition alliance and a potential swing of the Kurdish vote towards his rival could make him sweat. In general elections, our poll-of-polls table suggests A...

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