Groundhog Day
Last week’s polls indicate the opposition is gaining momentum across the nation, though there is still not sufficient evidence to call for a CHP-IYIP victory in Istanbul. Polls also determine that up to 10% of potential voters may be still undecided, with vast majority coming from AKP-MHP axis. Reason suggests that if the currency turmoil continues, most of these may stay home to boycott AKP, or vote against it.
AKP’s game plan for the aftermath is probably a “stability and reform program without the IMF”, if AKP-MHP manage to keep the large cities, but President Erdogan panicking about splits in his party and MHP, in case of a defeat, and resorting to more traditional and heterodox means of stimulus is a distinct possibility.
News flow confirms that US-NATO are serious to dissuade Turkey from purchasing S-400 anti-missile systems, while sanctions because of Turkey importing gold from Venezuela and its alliance with Iran are also in the cards. Erdogan diminished his chances of persuading Trump to cut Turkey some slack, by choosing to take the lead of the Moslem world in objecting to Trump’s statements regarding the sovereignty of the Golan Heights. We fear a sequel of the Pastor Brunson case might be on its way, which would change AKP’s post-election plans.
On the economy front, we briefly look at the “curious case” of falling net international reserves in the past two weeks, which, we also suspect, smacks of indirect intervention through state banks. A formal explanation from the CBRT was still unavailable at this writing.
The key release of this week, aside from capacity utilization and sectoral confidence indictors, is the February trade deficit, which, according to data released by the Ministry of Trade earlier, should come in around $2.2 billion, taking the 12-month rolling deficit down by some $3.6 billion to around $44.9 billion from $48.5 billion in January 2019.
Cosmo recalls the movie Groundhog Day, pronouncing that for TL to come out of the woods, AKP has to learn to get along with the West and employ orthodox economic policy.
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