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statements are unaffected by the situation and it can go on releasing huge profits—this is because of the generous “regulatory forbearance” exercised by the Erdogan administration.
The contractors behind giant infrastructure black holes along with energy, construction, tourism, airline and retail companies, along with a great number of small and medium sized enterprises (SMEs) in Turkey, are all found within the debt restructuring spiral.
Official inflation: When will the policy rate be cut? Market expects rate cuts in H2.
However, it is not anticipated that the ongoing monetary tightening process will last too long either since all economic actors have since 2016 been simply surviving on bank loans.
Producing that much additional lira via fresh loans fuels the exchange rate. What we have here is a vicious circle and Turkey will remain caught in its
cycle in 2021.
‘Goldollarisation’ will continue in 2021.
The “reforms” amount to absolute untruths—there is no need to waste time on these ‘troll’ stories.
Turkey’s export performance depends on demand conditions in the EU, not on the value of Turkish lira.
Given ongoing virus impact on the global economy, it is expected that Turkey’s export growth will remain limited in 2021. Even a contraction may be seen.
The EU remains the biggest export market for Turkey, buying around one-half of its exports. Germany is the top buyer within Europe.
The current account woes will be in place.
You can fairly anticipate that the financing of the resultant deficit will be conducted through hot money inflows as far as possible.
The government and corporates, meanwhile, retain their ability to raise funds via eurobond sales.
Turkish banks remained net debt payers across 2020 and their willingness to increase their external borrowing exposure in the present economic environment is expected to remain weak in 2021.
FDI inflows remained weak in 2020 and a radical change is not visible on the 2021 horizon.
However, a significant process of company acquisitions—delayed by the Turkish government since the 2018 lira crash—may be on the cards for 2021 as many of Turkey’s companies are bankrupt while financial and economic conditions are tightening once again.
External financing needs remain high but given that Turkey did not default even when it turned its back for a period on the global finance industry in 2020, it can be assumed that external debts will be rolled over in 2021 as well.
The world is awash with money and the leading four central banks led by the Fed are expected to print more.
8 TURKEY Country Report February 2021 www.intellinews.com
