According to Carla Slim, economist at Standard Chartered, Turkey’s local elections occurred at a particularly difficult juncture, with the economy entering a technical recession in Q4-2018, which prompted some loosening of the fiscal stance.
Key Quotes
“The AKP-MHP alliance maintained a total vote above 50%, reducing the risk of an early election. With political noise related to election cycles out of the way (next scheduled elections: June 2023), the focus is likely to switch back to the economic agenda.”
“Commitment to tight fiscal and monetary policy is important for Turkey’s economic and funding outlook.”
“We see three key factors to monitor for signs of policy direction shifts: (1) the CPI print on 3 April; (2) the unemployment rate; and (3) the central government budget release on 15 April. Policy makers’ rhetoric around these could provide clues about the policy outlook.”
“March CPI is unlikely to print better than February’s, with the Bloomberg survey consensus at 19.63% (versus 19.67% y/y in February). This confirms our cautious call for policy easing later in the year, especially in the wake of market nervousness over fluctuations in the central bank’s reserves.”
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