Page 45 - TURKRptJul19

metrics. However, both strengths have been eroded since 2013—and at an escalating pace. Market observers are currently focused on what share of the latest stimuli packages will come through in the form of new lending and how much will be in the form of restructuring non-performing loans (NPLs).
“Still lots of downside to GDP”. “My question on seeing this is how much of this is net new lending versus rollover of previously extended loans that are coming due. For there to be another positive growth impulse and destabilization of the Lira, the former is of greater concern,” Robin Brooks of the Institute of International Finance (IIF) said on Twitter after the latest TRY25bn loan package was announced. “The median peak-to-trough fall in real GDP for EMs that have BoP sudden stops similar to Argentina & Turkey is -7.0%. Turkey has so far done only -2.8%, Argentina a bit more excluding the Q2 '18 drought. There is still lots of downside to GDP unfortunately, especially for Turkey,” Brooks also said. No joking, the government’s latest moves with credit cards and loan packages are simply—and pitifully and plainly inadequately—described as evidencing “attempts to strengthen domestic consumption to overcome the recession”. But how long can the Erdogan regime—especially if president’s son-in-law and finance minister Berat Albayrak gets booted up and turns in another clumsy performance explaining thin plans—keep this ball in the air?
The inflation figures are under the control of Turkish statistics institute TUIK, while the USD/TRY rate is strongly manipulated via public lenders. That’s pretty useful to the officials, but any proper analysis has to question how sustainable it is to keep the state’s fingers in local lenders’ tills to keep pumping money into the domestic market and back the central bank’s crumbling FX reserves.
8.1.3 Deposits
45 TURKEY Country Report July 2019 www.intellinews.com