Ready for more political turbulence?
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?
A new poll reveals falling support for his presidency, as Babacan is rumored to launch a new party within a month. The unraveling in AKP ranks is visible and admitted by a series of conservative columnists. The CHP mayors of Ankara and Istanbul are gradually dismantling AKP’s patronage network, reducing its sway over voters, while Syrian refugees are becoming an explosive social problem, which forces Erdogan to act sternly in Syria to preserve Turkey’s domains to resettle them.
We have not given up hope on President reversing course to seek a rapprochement with the opposition to concentrate on the economy and Syria, but it takes a strong faith in his pragmatic side to buy into this scenario.
On the econ front, we provide some brief thoughts on the upcoming MPC meeting. Assuming not much will change between now and next Thursday on the currency side, we think the cut will be at least 300 bps.
Two key releases of the week are July balance of payments and industrial production data. The current account should register some $0.7 billion surplus in July, we reckon, raising the 12-month rolling surplus to some $3.4-3.5 billion, from $0.5 billion in June.
Cosmic Strategist claims Fed and ECB generosity will not help Turkish markets, which are suffering from deep political risks.
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