Weekly Tracker: November 22-28

TURKEY - Report 22 Nov 2015 by Murat Ucer

The cabinet announcement has been delayed to early this week, reportedly because of President Erdogan’s busy schedule, but some differences of views -- between Davutoglu and Erdogan – seem to be playing a role as well. On the most market-sensitive issue of Mr. Ali Babacan’s role in the new cabinet, there are three different speculations: that he would take a relatively significant economic role (as Deputy PM or Development Minister), a non-economy role as the Foreign Minister, and no role at all.

Consumer confidence has bounced back sharply in November, which is probably attributable to changed perceptions of political stability and relatively sharp appreciation of the lira. But judging from a few of the sub-indices, whether this will translate into actual spending is an open question.

The central government budget performed well in October, but this was almost entirely due to significant revenue from 4.5G license sales.

The labor market showed some signs of weakness in Q3, while inflation expectations have yet to become aligned with the Bank’s longer term forecast path.

We do not expect any action from the Monetary Policy Committee this week, though the MPC statement may include some dovish references in light of sharp lira appreciation.

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