You can read me later
We are fully aware that this Brief won’t make the top item on your weekend reading list, but since we will not release a weekly report this Sunday (because of elections), we thought we should quickly touch upon some of the developments and data releases of the past week – for the record.
May budget data showed a significant acceleration in primary spending, which was partially covered by revenue strength, but expect the budget figures to worsen markedly in the summer months. Consistent with this, Treasury is stepping up its domestic borrowing: after dropping to below 100% earlier this year, the domestic debt rollover ratio rose back to an estimated 120% in June.
Contrary to the general perception -- and quite a bit of anecdotal evidence in the affirmative, Turkey does not seem to be experiencing -- strictly speaking -- “capital flight” yet, but there is little doubt that there is enormous tension on the external financing side, and the post-election political picture will be crucial to where we go from here.
The unemployment rate edged up only slightly in March, but employment began to shrink, as only service sector added jobs. Home sales have picked up a little in May, thanks to various incentives and campaigns, while consumers seem to be getting a little weary.
Turkey’s twin elections are taking place at an incredibly delicate juncture. We maintain our view that Turkey will have to adopt a comprehensive program sometime in the next 3-12 months, but how we get there, is the key question.
Now read on...
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