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m/m to touch 63.5 in April at a time when the country is suffering from economic contraction, high inflation and high unemployment as well as tensions with its long-time ally the US. According to a TUIK survey, consumers were much more optimistic about the economic outlook and their financial prospects than the previous month even though they said that they expected the joblessness rate to rise over the next 12 months.
Recent data regarding vehicles sales, however, appeared to contradict the findings in the TUIK survey. The Automotive Manufacturers Association (OSD) reported last week that the country’s auto market contracted by 48% y/y in the first four months of the year. The passenger car market alone contracted 47% y/y to 93,000 units sold. In remarks he made over the weekend, Finance and Treasury Minister Berat Albayrak was upbeat about prospects. He said that the economy would overcome its recession with just two quarters of contraction. “Turkey has gone through tough times, yet, the end is coming closer step by step. The light at the end of the tunnel becomes brighter,” he added.
2.3 Politics - shorts
Turkey is considering whether to delay taking delivery of Russia’s S-400 advanced missile defence system after a new request from the US, various media outlets reported sources as saying on May 13. Talks on the possibility of a purchase delay reportedly continue.
Lira firms around 1% after Turkish defence minister says Russian missiles may not arrive in June. The embattled Turkish lira (TRY) firmed around 1% on May 28 after Turkey’s Defence Minister Hulusi Akar said the Russian S-400 missile defence system may not be delivered in June. Hopes rose that relations between Ankara and Washington, entangled in several disagreements, might improve. The lira pulled back to just under the 6-to-the- dollar—its strongest level in more than a week—during the day’s trading compared to the May 27 close of 6.0650, but by around 08:00 on May 29 it stood at 6.0385. The US has threatened to withhold F-35 fighter jets ordered by fellow Nato member Turkey if Ankara goes ahead and acquires the S-400. It says the S-400 could be used to compromise the plane’s performance data. "They may not make it by June but they will come in the months ahead. The process has begun," Akar said, in a sign the delivery timetable was slipping. However, May 28 also brought a report from Reuters that Washington is seriously considering suspending F-35 training for Turkish pilots taking place in the US jets if Turkey moves ahead with the plans to purchase the missile system. On May 22, Akar said Turkish military personnel were receiving training in Russia to use the S-400. If Turkey acquires the S-400 in a move the Erdogan administration has repeatedly described as a done deal, it could incur US sanctions under CATSAA, a law calling for sanctions against countries procuring military equipment from Russia.
Nato’s Secretary-General Jens Stoltenberg was in Ankara on May 6 making a final attempt at persuading Turkey to abandon its plan to buy Russia’s advanced S-400 missile defence system. He was due to back the prospects for successful negotiations on the alternative US-made Patriot air defence system. The US sees the S-400 as a security threat to ultra-expensive western military hardware including the F-35 stealth fighter jet. It will likely refuse to deliver F-35s to Turkey if Ankara goes ahead and acquires the S- 400, which could theoretically be put to use to expose the plane’s performance data.
An early version of a spending bill that includes the objective of preventing F-35 fighter jets being delivered to Turkey was released by the US House of Representatives appropriations committee on May 14. The appropriations committee’s bill would bar the use of federal funds to deliver F- 35s to Turkey. For example, it would forbid any spending for fuel or pilots to fly the aircraft to Turkey.
16 TURKEY Country Report June 2019 www.intellinews.com