It's all gas, now!
We have decided to change our report timetable a little, starting our Weekly today, i.e. a week earlier than scheduled. We plan to release our Quarterly report next Sunday, after seeing this week’s data releases, and deliberating a bit more on our baseline scenario internally.
In the brief span of a month during which the GSP Turkey team was on a recess of sorts, a lot has changed in Turkish politics. Betting on huge gas discoveries, it looks like the Erdogan administration is now almost certain to refrain from early elections, and an IMF stand-by as well, though elections remain a distinct possibility for the summer of 2021.
Naval warfare between Turkey and Greece is very unlikely, because the two neighbors have become masters of tension management over the 5 decades during which Cyprus and continental shelf disputes raged. Yet, moderate sanctions from the EU by the end of September are more likely going into autumn, which shall not deter Erdogan’s pursuit of staking out Turkey’s claims in East Med.
At home, COVID-19 remains the singularly most dangerous and least understood threat to economic and political stability. As the official daily count of new patients climb towards 1.6K/day, the truth might be much worse. How much worse? Perhaps 10-fold, says the Turkish Medical Association.
There have been several interesting data releases during our absence, which we selectively and briefly review inside, leaving a more detailed look to next week's Quarterly.
Looking to next week, we shall see several important data releases. We estimate that economic activity might have contracted by around 15%, q/q, in Q2, broadly in line with the consensus, while inflation will remain unchanged at around 11.8% in August, though, needless to say, there are very wide margins of error around both forecasts. The trade deficit, as preliminary data already showed, should come in at around $2.7 billion, lowering the 12-month rolling deficit to some $39 billion from $39.6 billion in June.
Cosmo is grateful to Fed for fine-tuning monetary policy, which would almost certainly add a new fervor to search for yield. Even high-risk Turkey may catch a bid—for a few months.
Now read on...
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