Page 4 - TURKRptDec19
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 1.0 ​Executive summary
       Erdogan is still losing ground at a quickening pace in parallel with Turkey’s deepening economic troubles​. The pro-Kurdish HDP became the first political party in this electoral cycle to call for early elections.
The Syria invasion mess continues ​with Erdogan determined to show voters back home he can successfully kick the Kurds away from the border. The current world order, meanwhile, continues to deteriorate with Nato even finding it hard to coherently overcome challenges laid down by members such as the Turkish strongman. What will replace it if it all unravels is unknown. But you might say the Erdogan regime is trying to get ahead of matters.
The US sanctions threat to Ankara remains but measures require the approval of the unpredictable Trump, an Erdogan ‘fan’​. 'The US vs Halkbank' Iran sanctions-busting case is on hold. Judge Berman ordered on December 5 that Halkbank must enter a formal plea to charges.
Official data on Turkey’s economic situation still indicates the country is pulling away from the trough​. “Official” growth for 2019 seems to be trending to somewhere slightly above zero with forecasts showing a remarkable alignment with the finance minister’s early ‘unofficial data releases’. The minister previewed the Q3 GDP data and kindly gave his insights on Q4. The Turkish economy he said had grown about 1% in Q3—and indeed it was confirmed by the subsequent official data release—has grown about 1% in Q3 and ​would grow by 4-5% in Q4​. The previous day President Recep Tayyip Erdogan let the second-order experts know that ​policy rates along with inflation would fall into the single digits in the near future and would remain there in 2020​. End-2019 inflation will it seems officially come in below 12%. The central bank appears set to continue easing its key policy rate, with some analysts pencilling in a cut as big as 200 bp to 12% at its December monetary meeting.
What if the data is being blatantly manipulated? ​Make no bones about it, the official economic and financial data in Turkey is too often surreal. The financial markets are subject to undeclared interventions, the media and judiciary quail before the powers that be.
People still need convincing that some kind of real recovery is at hand and ready for anchoring after they get through the upcoming winter. But ​winter began in November with three collective family ‘cyanide’ suicides in the face of hardship​. No surprises that officials did not address that hardship in their response. Instead they set about banning cyanide sales while the talk of recovery continued apace.
Turks still get angry when they see media reports that inflation has fallen into the single digits​ a​ nd the economy is growing​. Things feel a lot different in the real world. In October, dollarisation seemed like slowing after hitting peaks, but November saw new record highs in FX deposits. A sign that the latest loan stimuli cycle is again ending in FX deposits?
To overcome his economic woes, Erdogan is trying to re-deploy his trademark economy policy​, namely stimulating the economy by turning on the credit taps. Yet such is the wretchedness out there that private lenders are still dragging their feet over extending new loans and domestic confidence in the government remains pretty much at rock bottom. State banks, meanwhile, risk running over the 20% loan growth threshold set by the central bank to benefit from more favourable reserve requirements.
Concerns are still there over whether there will be an overshoot of monetary
 4​ TURKEY Country Report​ December 2019 ​ ​www.intellinews.com
 























































































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