The day the earth stood still
The politics section starts with an assessment of human and material damage of the earthquake, which could reach staggering dimensions. It is sad that the state started the initial effort to survey the damage only Saturday. On Sunday, a renowned seismologist made the dire prediction that up to 70K victims may still be under the rubble.
The second essay focuses on the next few weeks, when the politics author thinks disease and violence against Syrian refugees could further cloud the outlook for social peace and recovery.
In the final section, he boldly claims that President Erdogan might have lost all hope of winning the election, with two caveats. Elections are now more likely to be held on 18 June (rather than on 14 May), but Erdogan will try to postpone them as long as possible. The earthquake nudged Turkey deeply into his Dark Corridor scenario, where no holds will be barred and no act will be too despicable to contemplate in the quest to stay in power, or to acquire it.
Talking numbers at a time like this is always very hard and seem unconscionable even, but that’s what we need to do as analysts. The economics author shares some preliminary thoughts in that regard, arguing, tentatively, of course, that the economic impact may be relatively manageable. It’s more the social, humanitarian and political side that he remains extremely worried about. That said, the earthquake might have increased chances of an IMF program in an opposition victory scenario.
In brief, industrial production rose in December, m/m, and also in the final quarter of the year, q/q, which means GDP growth was probably positive in the quarter as well. The labor market weakened in December, with the broad unemployment rate edging up.
January cash budget data showed, the budget continued to hold up through the first month of the year.
The real exchange rate appreciated further in December, though we think it is too soon to call TL overvalued, from a historical trend perspective.
Finally, reserves rose somewhat in the week through February 3, but gross reserves declined sizably by another $3 billion during the 4 days of last week (through February 9), we reckon, while net reserves were broadly stable.
A key data release of the coming week is December balance of payments. We forecast the current account deficit at around $4.5 billion. If true, and without revisions to back data, this would mean the deficit would have finished the year as a whole at just over $46 billion, or over 5% of GDP.
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