Summer brings new hopes
Turkey’s COVID-19 daily case figures declined to three-digits on Saturday, allowing the administration to lift several restrictions on economic activity and social mobility. Most nations had to make that painful choice between public health and economic prosperity. Turkey, too, is normalizing before the virus is completely eliminated, significantly raising the odds for a second wave.
Domestic politics entered the dark tunnel of fear, loathing and conspiracy theories, which had in the past led to snap elections. Whether history will repeat becomes the second key question that will shape the course of Turkish economy and markets in the second half of the year.
President Erdogan and his loyal associate Mr. Bahceli of MHP seem to have developed a three-stage decision tree, where one of the branches lead to early elections.
In April, the trade deficit widened a bit more than the preliminary data had shown (because of higher energy imports), but this does not change the big picture: the 12-month rolling deficit widened in April, as exports dropped more than imports over a year ago.
The BRSA tweaked its Asset Ratio again last Friday, which had first been modified in mid-April, in order to prevent private banks from working around the rule, and coerce them into more lending.
We estimate, consistent with some media reports last week, the CBRT’s net reserves might have declined by about $50 billion in the first 5 months of the year.
The key data release of the week is May inflation. We expect the CPI-inflation to come in at just over 1%, slightly higher than the consensus, but there exists, needless to say, a huge amount of uncertainty around this forecast.
Cosmo warns His audience that any investment in EMs is very risky, before major member nations stump out COVID-19. But, opportunities exist for the nimble, one of which could be Turkish equities.
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