No country for old analysts
As we were finishing our final draft in the early morning hours in Istanbul, Egyptian President Sisi ordered his Armed Forces to prepare to intervene in Libya. While such a move could trigger clashes between Egypt and Turkey, we assign fairly low odds to a significant incident. Heads up, nevertheless…
Ankara’s use of regulatory agencies to influence the economy is intensifying by the day, which blatantly manifests Turkey’s ongoing de-institutionalization, and a tendency to severely meddle with the profit motive of traditionally pro-AKP business and merchants.
Recent polls reveal rising frustration with AKP’s economic management and yet another drop in the combined votes of the AKP-MHP alliance, but two opposition leaders don’t expect snap election this year.
The sacking of NY Federal DA, Mr. Geoffrey Berman, who is also the lead prosecutor in Halkbank case, as well as Ankara slyly delaying the activation of S400s suggest a gradual thaw in the bi-lateral relations, possibly driven by Ankara’s doubts about Russia’s commitment to the so-called “strategic relationship”. We expect little trouble in Turko-American relations until the US presidential elections in November.
Despite unbearable pressure, opposition parties chalk up moral victories against the Erdogan regime, which cast doubt on his absolute control over Turkey’s politics, as well as presaging sudden changes in voter dynamics.
Tax and premium deferrals continue to take their toll on the budget, with the overall deficit in the year through May having reached around TL90 billion, or some two-thirds of the annual target.
BloombergHT’s preliminary consumer confidence index surged in June, which probably reflects a euphoria of sorts related to easing of the lockdowns, but it is worth emphasizing that this indicator tends to be extremely erratic and seems to contradict the poll evidence reviewed above, which means that reversals/reality checks are quite likely down the road.
The key event of the coming week is the CBRT/MPC meeting on June 25th. Consensus ranges between a 25-to-50 bps cut, while we think another 50 bps cut is probably the most likely scenario.
His Cosmic Highness investigates the backstory of Telia’s sale of its stake to Turkish Wealth Fund, concluding that it could have a “chilling effect” on FDI, and perhaps even global banks’ propensity and willingness to lend to Turkey.
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