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ensure that resulting credit is provided only to viable borrowers”.
The economy contracted 1.5% in the second quarter, marking the third straight quarterly year-on-year contraction, but leading economic indicators have lately provided signs of economic recovery with reduced lira volatility and slowing official inflation. That’s not to forget of course that a lot of the data coming out of national statistical institute TUIK is being questioned by the opposition and some economists.
The IMF also remarked that additional steps to clean up bank and corporate balance sheets would support financial stability and stronger and more resilient growth over the medium term. Turkey’s banking watchdog recently told lenders to write off Turkish lira (TRY) 46bn ($8.1bn) of loans by the end of the year and provision for loss reserves, in a move targeted mostly at the hard-hit energy and construction sectors.
INSIGHT: Albayrak proclaims “soft landing” and sunlit uplands ahead, but it doesn’t add up.
He's back in the ring with his trademark PowerPoint slideshow. Albayrak seen on September 30.
Analysts were on September 30 quick to spot structural flaws in the Erdogan administration’s medium-term economic programme presented by Finance Minister Berat Albayrak.
The presentation portrayed Turkey bouncing back from the currency-crisis induced bitter recession it endured earlier this year to in 2020 record impressive growth, restrained inflation and fiscal and current account metrics that would have observers concluding that all’s rosy in the garden.
“High growth, low inflation, small fiscal deficit and small current account deficit. How is all this possible?” Timothy Ash of BlueBay Asset Management responded in a note to investors, adding: “...Erdogan to go back to the old script of it’s the economy stupid...”
The growth and deficit numbers “don’t seem consistent [or] coherent” without, for instance, an unexpected drop in the price of oil, which Turkey entirely imports, Ash added. His highly critical comments are noteworthy as he has lately been bestowing some praise on Erdogan and Albayrak, the president’s son-in-law.
Albayrak’s updated economy programme for 2020-2022 arrives with the trajectories of the Turkish lira (TRY) and Turkey’s assets presently outperforming all peers aided by policy stimulus and favourable global market conditions. Presenting his updated outlook, Albayrak proclaimed Turkey has achieved a “soft landing”, but the IMF was in town last week for an annual review of the Turkish economy and it wasn't slow out of the blocks in
21 TURKEY Country Report October 2019 www.intellinews.com