Political and economic update
After a jury found former Halk Bank EVP Hakan Atilla guilty of 5 charges, fears of wide-spread fines or sanctions on Turkish banks rose. Ankara, too, seems aware of the danger, reportedly initiating backchannel talks with Washington D.C. to mitigate the damage.The White House is likely to present a list of demands Ankara will be hard put to satisfy, leading to an escalation of tensions.
President Erdogan met French President Macron while his foreign minister was slapping fives with Sigmar Gabriel. Turkish rapprochement with the EU is good news, but unless AKP eases pressure on the press and opposition, it is unlikely to lead to concrete forms of cooperation.
At home, former President Gul is becoming more vocal about AKP’s abusive practices and might run against Erdogan. A recent poll confirms slipping support for AKP.
Latest growth indicators suggest growth remained strong through Q4, but its momentum has likely weakened. As we’ve noted in our Brief on the December inflation data during the week, higher growth has come with elevated imbalances in 2017, suggesting business as usual in Turkey -- that there is no free lunch.Aside from near-12% inflation, we now estimate that the current account deficit is likely to close the year at around 5.5% of GDP.
Cosmo is not impressed by the rally in TL assets. He finds everything too expensive and calls for a bad, really bad year.
Now read on...
Register to sample a report