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Nora Neuteboom, economist at ABN AMRO, suggests that while there is more resilient to a shift in sentiment, the Turkish economy is still in the doldrums.

Key Quotes

“The consumer confidence index recovered slightly in March and April this year, before suffering another blow in May. Retail sales were severely hit last September/October, and have slightly recovered since, though they have continued to hover around the same negative level since the beginning of this year. The PMI has picked up since September but has not yet moved above 50. In other words, the leading indicators paint a picture of modest recovery from the previous low levels but show no signs of a sharp bounce-back.”

“The global backdrop of low growth and the risk of a recession scenario in the eurozone will weigh on Turkey’s exports and therefore on the economic recovery. Different side of the same coin, the expectation of more monetary easing by the Fed and ECB is fuelling investor appetite for higher yielding EM assets, including in Turkey. This should generally be positive for the inflow of capital.”

“Therefore while we have seen the worst, we only anticipate a modest recovery. We estimate annual growth to remain negative in 2019 at -1.5% and to pick up to 2.5% in 2020. This is still far below the long-term growth trend (6.5% in 2010-2018).”