Page 9 - TURKRptMay20

defend the lira, and allow them still to run a very loose monetary policy,” Timothy Ash of Bluebay Asset Management said on April 2 in a note to investors.
“In the end the CBRT does not have enough reserves to sustain the current strategy that long. Question now in my mind is could they boost reserves from alternative sources? The IMF would be the obvious source, but Erdogan seems to have half burned that bridge... as he seems unprepared to take the political hit, while not wanting IMF oversight and conditionality. An alternative might be friendly central banks—thinking Fed, ECB, maybe even Qatar again. Erdogan mentioned as much in the G20 session last month,” he added.
As of April 26, there was no sign of an IMF or Fed swap deal ahead of ​talk​.
2.5​ “​Post-COVID world order”
A panel of economists organised by the European Bank for Reconstruction and Development (EBRD) and London School of Economics (LSE) on April 16 warned​ that governments and international institutions could get things very wrong.
Highlighting the scale of the global crisis we now face, several panellists likened the situation to during the world wars of the 20th century.
“We can’t go back to the old normal. The old normal was deeply dangerous,” Nicholas Stern, professor of economics and government at the LSE and one of three former EBRD chief economists on the panel, said.
He pointed to the “two decades of darkness” after the First World War.
When the pandemic started, globalisation was already weakened by the US-China trade war and there was uncertainty about the future of free trade, commented EBRD chief economist Beata Javorcik. A new generation of populists, some of them propelled to power by the widespread social discontent caused by the Great Recession of the late 2000s, are now in power in Brazil, Hungary, Poland, Turkey, the UK and the US, to name just a few countries.
The undermining of globalism was reinforced by the response to the pandemic as national governments closed borders and imposed restrictions on exports of critical goods such as wheat and protective and hygiene equipment.
“Export restrictions are worrisome because they could have a long-term impact by being used to justify protectionism. They may resonate with the public, and we may see globalism being rolled back,” said Javorcik.
Sergei Guriev, professor of economics at Sciences Po, forecasts that the pandemic will strengthen nation states further: “I think the nation state will come out stronger, and we will see self sufficiency as a policy goal, stockpile for next pandemic.”
But economists were divided over whether the crisis would encourage populism or if, as Javorcik commented, “expose the incompetence of populists”.
“We see many populist governments fail in fighting this crisis, by not delivering timely and competent responses,” said Guriev. The response — or lack thereof — by the presidents of Brazil and the US are notorious examples. Guriev expressed the hope this would lead to a shift away from populism — “or maybe not. The populists are very good at spinning their message,” he acknowledged.
9​ TURKEY Country Report​ May 2020 ​ ​www.intellinews.com