Calmer politics, slower economy
President Erdogan confused everyone with his performance during and after the NATO Summit. He first conceded to Swedish and Finnish accession in return for vague promises of help with Turkey’s war against terror, topped by support from the Biden administration for the delayed F-16 sale. He later changed his mind about NATO enlargement, or so it seemed. We developed some hypotheses as to what really happened, or where Turkey goes from here.
On the AKP front, nothing seems to go right, with bickering in the ranks, and the eagerly awaited mid-year fiscal stimulus generating little to no enthusiasm. The main opposition, the Nation Alliance, was holding yet another summit on Sunday at this writing, which we expect will deliver no progress on a unified economic plank, joint presidential candidate or concrete coalition plans. It seems domestic politics is in a pre-Eid siesta, with action expected to pick up only in late August or so.
The June manufacturing PMI and confidence data showed that the economic slowdown is becoming more discernible in the final month of the quarter, though the quarter as a whole may have still yielded modest sequential growth.
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