Suspense Continues

TURKEY - In Brief 09 May 2018 by Murat Ucer

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After a high level meeting of economy ministers and bureaucrats held at the Presidential palace this afternoon, the President's office issued a statement, which we offer a quick and dirty translation below to help you to draw your own conclusions. (The original statement in TR can be accessed here.) The statement covers a wide range of (often conflicting) goals and policies, lacks specifics and does not seem to recognize the main trade-off that is nowadays bothering investors the most: the trade-off between pro-growth policies on the one hand, and continuation of internal and external imbalances, on the other. If anything there is much emphasis on the continuation of pro-growth policies, with, for instance, banks "advised" to help out the real estate/construction sector, with little recognition of the growing strains on the banking sector as such. The good news is that the statement seeks to sooth investor concerns on the F/X regime by ruling out non-market interventions, or imposition of restrictions on F/X deposits. It also says that the CBRT will continue to use all instruments at its disposal, though this hardly implies that bold (rate) action is around the corner.Bottom Line: The statement has left us with the impression that: 1) a correct diagnosis on why we are here in the first place has yet to be made; and 2) the need to hold an emergency CBRT meeting with bold action (a'la January 2014) was not one of the conclusions reached at today's meeting -- at least as of this post. So suspense -- and uncertainty -- continues. While we do not see much sign of imminent action here, we continue to think it is not going to be possible to wait -- under the circumstances -- ...