A clear and imminent danger
Turkey is in the midst of a deep COVID-19 crisis, which should supersede all other topics in the domestic agenda. On Saturday, the press reported that dozens of private hospitals in Istanbul were to be converted to pandemic care facilities, attesting to the severity of the second wave. We predict that things will get worse as the winter arrives, compounded by a dearth of essential medicines and the exhaustion of health professionals. We also predict significant changes in economic and political dynamics over the winter months. In foreign policy, we discuss how Biden and Erdogan would get along, if the former is elected President.
On the corporate front, we briefly review the pros and cons of a new TL500 billion amnesty package, that cover taxes, state fines and wealth abroad. Aside from this, there is not much to report on the econ side, so we save our appetite for the Monthly report we plan to publish next Sunday, in a Q&A format. We sort of know what’s in investors’/our readers’ minds as far as the macro environment goes, but email us, if there is any particular question that you like to be addressed.
Regarding the upcoming week’s data releases and attractions, aside from October sectoral confidence indices (and capacity utilization rate), we shall see the year’s last Inflation Report as well as the final and detailed September trade data, which will be released on October 28th and 30th, respectively.
We expect the CBRT to raise the yearend inflation forecast to 10.5% (mid-point) from 8.9% in the July report, and to 8% for end-2021, from 6.2% previously, judging from what’s already in last month’s NEP, although even these forecasts look hugely optimistic already. As for the September trade data, we already know, based on the preliminary release by the Ministry of Trade, the deficit should come in at around $4.9 billion (September 2019: $1.7 billion), on the back of just under 5% growth in exports, y/y, and some 23% growth in imports -- the latter partly boosted –once again-- by gold imports, we reckon, of about $3 billion (September 2019: $0.9 billion).
Cosmo explains what “Biden Trade” is and how it could coincide with falling confidence in CBRT to trigger heightened volatility in the currency markets.
Now read on...
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