Welcome to a scorching hot summer
Rising daily corona cases even dismayed the Hero of the Day, Health Minister Dr. Fahrettin Koca, as easing the last of COVID-19 restrictions by end-June appears very likely to invite a second wave.
In US-Turkey relations, there is a tiny bit of a trouble, called Mr. Metin Topuz, but both sides have too much on their plates to mess with each other.
At home, AKP-MHP redoubled their campaign to discredit the opposition, as well as inventing new agendas to distract people from the economic distress. Twitter Wars is the new addition to the “agenda”, with AKP likely to introduce legislation to censor social media, too. Yet, Turkey’s new generation that makes up 20% or more of the eligible voters, will not like their favorite dating and information gathering platforms to be invaded by state inspectors. It is not certain whether the social media crusade is a preparation for it, but early elections are still a possibility by autumn or winter, if President Erdogan can’t steer the economy to calmer waters.
On the econ front, although industrial production collapsed in April, things should look better in May/June, but that is not the issue. As the OECD, among others, warned last week, the recovery is very likely to be a long and drawn-out process, including in Turkey.
The unemployment edged up slightly in March (February-April average) because, somewhat puzzlingly, over one million people stopped looking for jobs, i.e. dropped out of the labor force.
After a pretty dreadful March, April balance of payments data was pretty bad as well, with a large current account deficit, capital outflows and substantial reserve losses. Things may be manageable in the very near term, with lost tourism revenue offset by import compression, and relatively light external debt amortizations, but beyond that, they look very unsustainable.
Meanwhile, the CBRT reserves have been relatively stable in recent weeks, despite a relative pick-up in dollarization, which probably owes to the usual round-tripping of F/X liquidity within the system through swaps.
On corporate news, we briefly talk about a new survey by TUSIAD, TURKONFED and UNDP, which finds, among others, that almost 60% of enterprises are not ready for a second wave.
Cosmic Man is deeply unhappy with Himself, because He can’t find valid reasons to be bearish on TL denominated bonds.
Now read on...
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