Weekly Tracker: April 24-30

TURKEY - Report 24 Apr 2016 by Murat Ucer and Atilla Yesilada

Turkish politics will be entering a dark tunnel as of the start of this week, our politics author argues, which promises nothing but turbulence and uncertainty. As a result, political risks will indisputably rise, but providing a precise timing as to when is extremely difficult. You may read the essays inside as a prelude on political risks for our upcoming Quarterly, which we plan to issue next Sunday, at the latest.
The IMF reports on Turkey from the January Article IV mission have been released. Admittedly, we are yet to read the reports in full, but the gist of the Fund’s assessment regarding 2015 is very similar to ours, while its 2016 macro forecasts – which we are in the process of reviewing our own – look somewhat different.
Regarding past week’s data releases, TURKSTAT’s consumer confidence index showed a further albeit slight recovery in consumer confidence in April, while the overall level of the index remains quite low. Home sales rose modestly in March, as mortgage-backed sales continued to shrink, but other sales stayed relatively resilient.
The key attraction of the upcoming week is the presentation of the second Inflation Report of the year by the new CBRT Governor Murat Cetinkaya on Tuesday, which will be his first major public appearance that we know of. We do not expect major changes in the report, with this year’s yearend inflation estimate of 7.5% remaining broadly intact, while Mr. Cetinkaya’s performance will be monitored closely by the analyst community. A key data release of the week is March trade data, which, based on preliminary data, should yield some $5 billion deficit. If correct, this would take the 12-month rolling deficit down by about $1.3 billion, to some $60 billion, mainly owing to a lower energy import bill.
In terms of markets, fundamentals suggest that they are fully priced, but momentum and liquidity suggest there is little hazard in lingering a while longer, as long as you are comfortable with tail risks.

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