Fast politics, slow economy

TURKEY - Report 04 Oct 2026 by Murat Ucer and Atilla Yesilada

President Erdogan belatedly grasped that the fund scandal could cost him a large amount of votes, and decided to bite the bullet and compensate all victims to the tune of TL1 million, max. In the end, all holders of funds with the suspect assets managers will be compensated at the principal value of their stakes plus a CPI adjustment. While Erdogan’s fiscally costly decision may have stopped the bleeding at Borsa Istanbul and saved him votes for the time being, he has so far failed to stamp down allegations about AKP members or their affiliates making huge profits on the scam.

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As heralded by sectoral sub-indices, the overall economic confidence index (ECI) rose further in September, reaching its highest level in over two years. The divergence between ECI and the anecdotal evidence regarding the broader sentiment in the country is puzzling, to say the least, but we speculate on the reasons why this might be. Meanwhile, manufacturing PMI softened in September, but edged up slightly in the third quarter as a whole, over the previous quarter.

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