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● September 26: Elections in Germany.
● Corona: Tourism season opening in April.
● On February 3: January official inflation release. Signals on when the policy rate will be cut will be watched.
The earliest chance the officials have to make the case that inflation has fallen into the single digits (or has entered into a declining trend) will come in May (according to market expectation and basic calculations on official data series), ceteris paribus and as long as Erdogan does not attempt to push his luck.
The May inflation reading will be released on June 3, but Erdogan may launch a rate-cutting process as soon as March.
Current market expectations suggest an end-2021 official inflation at over 10% (but note that no one knows what will happen tomorrow) while the central bank has a 9.4% target, just shy of double digits.
● February 18: Monetary policy committee meeting decision at 14h Istanbul time.
January 21: Hold at 17%.
● Loan flow: Recently negative, it has direct impact on USD/TRY.
● USD/TRY
● Balance of Payments: The current account is producing sharp deficits again since November.
● Eurobond auctions: The Treasury and banks are awaited in February, Istanbul mayor waiting Treasury approval to sell about €300mn worth of papers.
● Regulatory forbearance, NPLs, bank balance sheets, bailout and debt restructuring queues.
● Snap polls?
2.2 Outlook Turkey 2021
Perhaps, we should not easily buy the recovery in the “real economy” story for 2021. We are familiar with outlooks brimming with positivity at the beginning of a new year, but we should not forget that those who produce these dominant discourses are typically those that also drive global liquidity in the financial markets.
In November 2020, the music changed in the US. Biden’s policies will be the main determinant as to what will eventuate in Turkey in 2021.
As of January, it seems more likely that Biden’s administration will aim to make use of Erdogan.
The sanctions noise and the Halkbank court case will continue to hang over Erdogan’s head but the perennial story suggesting that Erdogan will be smashed between the irreconcilable demands of Washington and Moscow seems unlikely to come to pass in 2021 despite Biden in the White House.
Snap polls?: Erdogan enters 2021 with his support among voters at below
6 TURKEY Country Report February 2021 www.intellinews.com
