Macro thoughts: take two
We take stock of the political landscape, update our thoughts on the macroeconomic outlook for this year, and take a quick glance at the next.
The pressures in the currency market continue unabated, as attested to by myriad interventions and controls, but the likelihood of a pre-election ‘currency event’ or an accident, appears quite low now, provided depositors will keep their calm.
After the elections, Turkey is faced with two starkly different macro trajectories, depending on, unsurprisingly, what sort of a political outcome emerges from the elections and how smoothly the transition plays out. We remain constructive on what we earlier dubbed the ‘opposition-takes-all’ scenario, which fetches reasonably high odds now, though with caveats, as discussed in the politics section.
All other scenarios would wreak havoc in the economy, we think, simply because they would produce no material change in the current unsustainable set of policies, lead to more distortions and controls, and ultimately culminate in a full-blown financial crisis.
We provide some highly tentative and illustrative forecasts under our baseline, i.e., opposition-takes-all scenario, and say a few words on what alternate scenario(s) could look like.
Now read on...
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