Page 5 - TURKRptMay19

1.0 Executive summary
Turkey , you might say, has more or less been in limbo since election night on March 31. The economy, the financial markets, domestic and foreign politics—in short, the country as a whole—are all waiting to find out what road the previously invincible President Recep Tayyip Erdogan will take following poll results showing that he and his AKP party have lost Ankara and Istanbul to the opposition.
On the market frontlines, the thinking is often woolly. Markets await news of the strategy Erdogan will decide upon in the wake of municipal poll results . The air is thick with tension and then there is the small matter of the F-35 jets/S-400 missile system row with the US that seems to be coming to a head .
Meanwhile, it is being discussed what is going on with the central bank’s reserves . Erdogan lashed out at FT over report on Turkish central bank’s ‘enhanced’ FX reserves.
Ekrem Imamoglu, the opposition candidate who scored the biggest triumph in the end-of-March local elections that became an unofficial referendum on Erdogan, was declared mayor of Istanbul on April 17 . He was awarded the formal mandate even though a decision is still awaited from the High Election Board (YSK) on whether to accept a formal appeal from AKP to re-run the vote in the country’s largest city.
Turkish finance minister and son-in-law of Erdogan , Berat Albayrak, shared a photo on Twitter showing him in the Oval Office with US President Donald Trump, Trump’s son-in-law and aide Jared Kushner and US Treasury Secretary Steven Mnuchin .
The prospect of Turkey being hit by US sanctions has increased following the introduction by two senators of a bipartisan bill targeting Turkish officials responsible for the detention of US citizens and local consulate staff in the country.
The leaders of the US Senate Foreign Relations and Armed Services Committees warned Turkey on April 9 that it risked tough sanctions if it persisted with plans to purchase Russia’s S-400 advanced missile defence system .
Turkish finance minister’s economic package goes nowhere with investors . It’s fair to say that the structural economic reform programme presented by Albayrak on April 10 went down like a lead balloon with many analysts.
Official annual consumer price index (CPI) inflation very slightly edged up to 19.71% in March from 19.67% y/y in February.
Calendar-adjusted industrial production index contracted for a sixth consecutive month in February . Calendar-adjusted ret ail sales contracted for a sixth consecutive month but at a decelerated pace of 4.9% y/y in February. Vehicle production continued to worsen in March. Turkish consumer electronics market is expected to contract 15% this year. GDP forecasts are revised downwards .
Official unemployment rate grew again in January, moving up to 14.7%, the highest level seen since March 2009 .
In February, the current account was in negative territory to the tune of
5 TURKEY Country Report May 2019 www.intellinews.com