Turkey Country Report Jul19 - July , 2019

July 5, 2019

The June 23 Istanbul revote has delivered an earthquake in Turkish politics—Ekrem Imamoglu, candidate for the main opposition party, has recorded a stunning victory over the candidate backed by President Recep Tayyip Erdogan

Analysts should now be pondering when early elections will be called.

On the foreign politics front, Erdogan is contending with a July 31 deadline set by Washington. An ultimatum sent in a letter by the US defence department calls on Turkey to scrap its order for Russian S-400 missile defence units by that date.

Turkey’s economy is fundamentally loused up in so many ways, but Erdogan & Co have so far not brought forward anything like a fundamental fix. Instead, they have been pouring in Treasury-backed credit to achieve a few short-term economic spurts to persuade voters to stick with them, first in the local elections, then in the Istanbul revote.

The long-awaited meeting between Turkish President Recep Tayyip Erdogan and his US counterpart Donald Trump was held on June 29 in Osaka, Japan on the sidelines of the G20 summit but the meeting has brought no logic to S-400 row but temporary relief for Turkish assets.

The Trump administration still plans to impose sanctions on Turkey and remove it from a critical fighter jet program if the NATO ally acquires Russian S-400 air defences, the US officials told Reuters on July 3.

“They want to see a Turkey like before, a Turkey that went cap in hand to the IMF,” Erdogan said on June 18.

Turkey’s Ministry of Treasury and Finance has sold $2.25bn worth of US dollar-denominated eurobonds due 2024 at a coupon rate of 6.35% and a yield to investor of 6.45%.

Amid a perfect chaos at all fronts in policymaking, Turkish markets are keeping to ride a roller-coaster based on ups and downs in portfolio inflows and outflows that cyclically follow each other.

Turkey set for 1% contraction in 2019 GDP: World Bank.

Turkish construction sector expected to shrink more than 10% in Q2.

Turkey’s calendar-adjusted industrial production index contracted for an eighth consecutive month in April.

Turkey’s official headline CPI inflation fell sharply to 15.72% in June from 18.71% in May.

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