Weekly Tracker: March 13-19
Davutoglu’s provocative refugee proposal to EU is not acceptable in its initial form, meaning that some kind of bargaining will have to take place. Given that there is no Plan B for EU, and no other direction to turn for Ankara, we bet on some type of a compromise.
Russia might propose a federal Syria in the Geneva proximity talks to take start on Monday, but we are not too hopeful progress will be made. In case the ceasefire breaks down, Turkey’s proxy war with Russia will heat up once again, while terror, too, could escalate in the coming months. Apropos terror, the pro-AKP press claims that PKK has plans to terrorize Western cities beginning on March 20th. More suicide bombing attempts could kill the tourism season, deepening Turkey’s economic woes.
Rejected by the nationalist MHP, AKP plans to introduce its own draft Constitution to the Grand Assembly by the end of April and hold a referendum vote in June, after which time we expect discussions about an early election to get serious, betting on two ballots within a year and a half.
January industrial production suggested a strong start into the year, but we continue to find growth forecasts at around 3.5% or higher on the optimistic side, as we quickly explain inside.
January balance of payments data offered little new. Twelve-month rolling current account deficit declined but only slightly to just under $32 billion, while cumulative inflows amounted to a meager $7-$8 billion, with the rest of the financing provided through CBRT reserves and unidentified inflows, which has hence yielded the weakest inflow picture since the global crisis.
After January, February cash-budget, too, confirmed our concerns that this will be a very difficult year to curb primary expenditure growth.
Cosmo is gambling that the current dead-cat bounce in EM at large, and in Turkey in particular, will last another 2-3 weeks, at most.
Now read on...
Register to sample a report