Groundhog day economics
In this quarter’s installment of our forecast report, produced in an environment of “radical uncertainty”, both domestically and abroad, we once again deviate from the traditional format and share some tentative thoughts and numbers on how the macro might play out until the local elections of March 2024.
The unexpected 11th hour return of former Deputy PM and Finance Minister Mehmet Simsek as the economy “czar” – following President Erdogan and his alliance’s surprise victory in the May elections -- triggered hopes of a U-turn in economic policies, and of a reversal, from an otherwise precarious economic trajectory.
But while these changes might have bought some time for the Erdogan administration, a tangible and credible switch to “orthodoxy” – capable of attracting portfolio inflows and keeping locals firmly in TL – is wishful thinking, we think. Developments to date have already shown this in fact, such as an underwhelming rate hike by the CBRT -- and signals of an extremely gradualist approach more broadly; the absence of a coherent economic program even in its broad contours, and the haphazardly -- and at times problematic -- appointments to a few key economic posts.
Now read on...
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