Page 10 - Turkey Outlook 2022

This does not, however, mean that the public “bidding” on the outcome has
ended. Far from it. It will come on stronger and stronger in the run-up to the
GDP announcement date in March.

Erdogan likes to roll out the biggest GDP growth figure possible, so here at
bne IntelliNews we are always one step ahead of everyone. As early as
November 18, we hiked our expectation to 15%. We moved into the double
digits three months previously in August.

3.2 External environment

Global outlook

Our Outlook 2021 Turkey report read: “So, perhaps, we should not easily buy
the recovery in the ‘real economy’ story for 2021…

“The world is awash with money and the leading four central banks led by the
Fed are expected to print more.

“Printing more and more hard currency means the prices of financial assets,
including real estate, keep smashing records. Note that this is not standard
inflation.

“However, the money printing madness has had no impact on the real
economy as the finance industry ensures that the new money is kept among
already wealthy people, who are already consuming to the max.

“The solution imposed by the finance industry to the shrinking real economy is,
as always, pat: governments are to fuel fiscal expenditures.

“The focus of the market is right now on the Biden administration’s likely virus
package. The virus package discussions will drive the financial markets, at
least across the beginning of 2021…

“We will see how effective the fiscal support will be in delaying what could be
the ultimate collapse, toppling 1929 from its throne.”

The Fed’s balance sheet is still breaking records. On December 15, the Fed
said that it would cut its monthly net money printing volume by $30bn to $60bn
in January from $90bn in December. It plans to employ identical cuts in
February and March.

The Fed’s net money printing is thus to reach zero in April. The previous
schedule, released in November, suggested zero in July rather than April.

The Fed governors, moreover, currently expect the delivery of three rate hikes
in 2022. They would bring the policy rate up to 0.75-1.00% from the current
0.00-0.25%.

Note that around $1.7 trillion has already been printed. It presently resides on
the Fed’s balance sheet under the Treasury General Account (TGA) and the
Reverse Repo (RRP) account. When the Fed zeroes its net money printing
volume, this money will continue flowing into the system.

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