Weekly Tracker: November 15-21
The new cabinet is expected to be announced this week, when we shall get to see who’ll be in charge of the economy and/or what the new division of labor will be in the management of the economy. Yet, it will probably take a lot longer to get a clear picture on the more important issues like the exact nature of the policies and priorities of the new government, and how it plans to deal with all the promises made -- and the resulting fiscal implications.
AKP has decided to increase the minimum wage, as promised, by 30% as of January 2016. The decision is already causing further distortions -- and budgetary costs -- as the government tries to think ways of reducing the burden on the employer.
The current account deficit continued to shrink in September, thanks to a declining energy bill and (non-energy) import compression, while financing continued to look flimsy. In monthly terms, the adjustment in the core balance also seems to be gaining traction.
Industrial production (WDA) grew by 2.8%, y/y, in September, bringing the full quarter growth to 3.4%, slightly down from 3.7% in Q2.This suggests that GDP might have expanded at another 3%-ish pace in Q3, y/y.
Meanwhile, the IMF and the OECD released their updates on the Turkish macro outlook this week. They forecast 2.9% and 3.4% growth for 2016, respectively, which, unsurprisingly, is noticeably below the official 4% target.
Turkey is in the spotlight, as the G20 Leaders’ Summit is being held in the southern city of Antalya today and tomorrow, though this has now come under the shadow of the horrific terror tragedy that took place in Paris over the weekend.
On the EU front, Turkey was handed a pretty critical Progress Report, and a €3 billion grant to deal with the refugee problem on the side. Whether a renewed “EU-anchor” of sorts can emerge from this somewhat desperate and not-so-sincere relationship -- as markets seem to be hoping for -- remains to be seen, but we are skeptical.
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