Page 5 - TURKRptOct19

1.0 Executive summary
Erdogan’s in action again. While we’re concluding this report Turkish jets were bombing Kurds in northern Syria.
Risks are huge as usual and there is again bipartisan fury in the US Congress.
However, the inexplicably strong personal bond between Erdogan and Trump remains.
Erdogan is in big trouble at home. His power is dramatically sliding following the Istanbul revote on June 23.
He has hopes some Kurd killings will help him retrieve some power and Europe will give him billions of dollars aid to build homes for immigrants on the lands he would invade in Syria.
Turkey’s next elections are not scheduled until 2023 but we had a bet, following the Istanbul revote, that it will not pass longer than one year until the next elections. We remain stuck to it.
Official data and Erdogan’s propaganda machine, which also dominates mainstream global news services and analysts for a while, have been suggesting somehow turning from the dip but no-one should be convinced that any kind of recovery is at hand before getting through the upcoming winter.
Turks are getting mad and buying more and more dollars when they see on media reports that inflation fell to single digits and the economy is growing.
In order to overcome his economic troubles, Erdogan is trying to employ his trademark economy policy, namely stimulating the economy by turning on the credit taps, but such is the wretchedness out there by now that private lenders are dragging their feet over extending new loans and domestic confidence in the government is pretty much at rock bottom.
Concerns are still there about whether there will be an overshoot of monetary policy, and a renewed depreciation in the currency.
However, public lenders have so far managed to defend the local currency at the cost of burning huge amounts of central bank reserves while The Dude makes the equity market.
Domestic borrowing market is almost idle following a series of huge muffs since last year while external borrowing channels are also not promising.
The Erdogan administration has not come yet to the page of zombie companies and hidden NPLs at bank balance sheets from spending energy on manipulating realities.
Living dead companies are seen to weigh on his plan to turn on credit taps to stimulate the collapsed economy.
As a solution to the NPLs problem, Erdogan says “now time to pay up” to banks but banks are dragging their feet. Since 2016, banks are carrying the Turkish economy.
OECD cut its GDP contraction forecast for Turkish economy this year to 0.3% from a previous 2.6% released in May.
IMF raised its forecast from -2.5% to 0.25% but at the same time said of the country’s post-currency crisis financial markets that the “the current calm appears fragile”.
In a report released after the annual visit to Turkey paid by its staff, the IMF
5 TURKEY Country Report October 2019 www.intellinews.com