Political and Economic Update
After a fighter jet believed to be operated by Assad’s loyalists bombed Turkish forces in Syria, the prospect of a PYD/YPG-Turkey-Assad conflict has risen substantially. Syria is now our top political risk.
The European Parliament resolved to freeze Turkish accession temporarily. EU leaders are unlikely to follow up on the recommendation, but the current form of the relationship is becoming obsolete. It is time to consider alternative approaches, before tensions escalate to the point they harm the economic dimension.
At home, President Erdogan hinted that the State of Emergency could be extended for another six months, while the Gulenist purge continues like brush fire. AKP and MHP are taking their sweet time negotiating the particulars of an Executive Presidency. The draft bill will probably not surface before January. And, will Erdogan emerge victorious? We present the latest poll results.
November growth indicators are coming in somewhat mixed, but we think the growth environment remains weak. Meanwhile, it is once again confirmed that the average analyst -- according to the CBRT’s November Expectations Survey -- sees a fairly gloomy outlook ahead, with growth slowing yet vulnerabilities remaining high, which has been our read for some time.
The key release of the week is October trade data on Wednesday. According to the (preliminary). Ministry of Customs and Trade data, trade deficit was $4.1 billion in October, which would correspond to an increase in the 12-month rolling deficit to some $56.7 billion, from $56.2 billion in September, driven by a widening in the ‘core’ (overall less energy and gold) deficit.
Cosmos asks a weird question: Would you buy Turkey risk at higher interest rates? Why on earth would He want to know this? Read His rantings and find out.
Now read on...
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