Political and Economic Update
The politics section of the Weekly has been penned before Kilicdaroglu’s justice rally in Istanbul, which is expected to proceed without a major security incident. The first section assesses whether his 450 km march from Ankara to Istanbul could alter the political equilibrium in the country. The second section focuses on AKP’s troubles in its own home, which appear permanent, a finding that leads us to call for early elections. But when? Read and find out. Finally, we regretfully inform you that Turkey is once again as isolated as Robinson Crusoe.
The June manufacturing PMI data was very strong, suggesting steroids are working, admittedly a lot more effectively than we had envisaged, even though this changes little in the way we see the secular growth outlook. Despite strong growth, trade deficit is behaving, which is encouraging, but don’t bet on it continuing for too long. Cash budget signals another temporary relief in headline fiscal data in June, but trends remain concerning because pressures for higher tax “expenditures” and stepped up primary spending are not going to disappear any time soon. This also means that (domestic) borrowing requirements will continue to remain elevated.
The key data releases of the week are May industrial production (Monday) and balance of payments data (Thursday). We estimate the current account deficit at around $4.6 billion, which is somewhat lower than the consensus. If true, this would raise the 12-month rolling deficit to $34.7 billion in May, from $33.2 billion in April.
Cosmo is in an incredibly good mood, perhaps because He got a chance to sample His favorite food, pork ribs plenty of times while He was in the States. You’d amazed how He puts a positive spin on last week’s TL weakness.
Now read on...
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