The month of Syria

TURKEY - Report 01 Sep 2019 by Murat Ucer and Atilla Yesilada

Ankara is in trouble in Syria once again. This time it is different, because Erdogan can get along neither with Putin, nor the US (ex-Trump). Bad-case scenarios such as sanctions, clashes with Kurds and Assad’s Army in Idlib dominate our crystal ball.

At home, Erdogan is feeling the pressure from various quarters, judging by his increasing adventurism in Syria, hopeless efforts to accelerate economic growth and constant bashing of his opponents. We predict more political turbulence in winter months and formidable challenges to his one-man rule.

Trade deficit narrowed further in July in 12-month rolling terms, while its monthly pace points to a stagnant economy. The Economic Confidence Index recovered in August, but it remains depressed -- and bumpiness is likely to continue through the fall.

With the appointment of two deputy governors – a technocrat and an academic, the Monetary Policy Committee is fully staffed now, but this does not change our view that monetary policy decisions will largely be dictated by the Palace.

There are myriad of data releases next week, with two especially significant ones: Q2 NIA and August inflation, which we discuss very briefly inside.

Cosmic Dude says Fed may cut rates as much as the markets dream of, but it will scantly help Turkey. All eyes at home will be watching Syria, where developments could continue to increase CDS premiums.

Now read on...

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