Would you bet on Trump?
President Trump announced that he wants GIs out of Syria as soon as possible, which may or may not be an official policy pronouncement. If the US does indeed withdraw from Syria, Turkey’s conflict with its powerful NATO ally would decline to manageable levels, mitigating the possibility of damaging sanctions.
Turkey appears determined to sort out its cross-border security problems by the way of military force, as threats to march on to Kurdish-US held city of Manbij and the east of Euphrates were joined by new ones to chase PKK in Iraq.
In the first round of Manbij talks between Turkey and the US, parties agreed “to walk together” in Syria, but it is difficult to find signs of cooperation on the ground. Pentagon just added to its troops in the city, while Kurds refuse to abandon it.
President Erdogan’s summit in Varna with Messrs. Juncker and Tusk yielded nothing beyond talk-talk, while French President Macron’s offer to mediate between Kurds and Turkey in Syria drew strong protests from Ankara.
At home, AKP can’t dispel early election rumors, which might become a self-fulfilling prophecy. New polls reveal that AKP-MHP will easily win national elections, while AKP would capture Istanbul and Ankara in the mayoral races.
Both overall and core trade deficits continued to widen in 12-month rolling terms, but the core deficit appears to have peaked, with the wedge between core import-export growth rates narrowing.
The Q4 GDP growth numbers made stellar headlines, but details did not point to as strong a picture, while the authorities seem to be aware that sustaining this performance through November 2019 will be extremely challenging, to say the least. This explains why President Erdogan again lashed out at the Interest Rate Lobby last week.
External debt rose to over 53% at end-2017, up from around 47% at the end of 2016, bringing the increase in the external debt-to-GDP ratio in the past few years to over 10 percentage points. This is partly driven by the shrinkage in US (nominal) dollar GDP to some $850 billion, down from a peak of $950 billion at around 2013.
The key data release of the week is March inflation. Market consensus for CPI inflation is 1%, with which we broadly concur. If true, this should leave the 12-month headline inflation unchanged at 10.3%.
According to Cosmo, April is a fateful month for markets when investors will have to bet on Trump’s predictability.
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