New year, old agenda
Our politics coverage starts with a preview of four major events that will define the course of Turkish politics. President Erdogan and nationalist ally Bahceli are likely to emerge victorious from end-March municipal polls, after which they will tackle the unfinished business of amending the constitution to grant Erdogan a third term, among other things. While AKP-MHP lack the numbers in the Grand Assembly to take a new constitution to a national referendum, it is not out of the question that Turkey will face another ballot in early 2025.
Abroad, EU leaders could possibly decide whether to renew the Customs Union treaty in a mid-year summit. Odds are they will kick the can down the road. Erdogan and Putin are praying for the re-election of Trump, which could lubricate the troubled Turko-American relationship, with several concrete benefits for Turkey.
On the econ side, we maintain that economic activity was weak, but probably avoided contraction in the final quarter of last year, as we’ve been conjecturing, while the December preliminary trade data showed finally some contraction in core imports, y/y, by our estimates.
The CBRT’s Monetary Policy document for 2024 offered little new, nor was it, perhaps unsurprisingly, particularly transparent regarding the workings of the F/X market, but it was a compact and sensible document, on which we share a few highlights.
The minimum wage was raised by a higher-than-expected 49%, the implications of which we review briefly.
After peaking at over $145 billion around December 22, gross reserves have been generally declining through Thursday last week.
Looking ahead to the coming week, among others, we’ll see December cash budget data on Monday, and November balance of payments data on Friday. A local poll we saw on social media placed the median current account deficit at $1.6 billion, which happens to be slightly below our estimate.
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