Concerns regarding Turkey’s ability to rollover its external debt are mounting. One reason behind those concerns is the expectation that the global economic climate will change. Another reason is the unfavorable economic and political outlook in Turkey.
It has been observed that the ministers who oversee the Turkish economy have made an effort to raise expectations more than ever in order to feed into the positive market outlook.
By looking at developments last week, the markets have priced in the “best scenario” in Turkey-U.S relations. They will continue to price in those positive expectations unless there are reports suggesting a different course.
An omnibus bill has brought “treasury single account” discussions to the forefront and reminded the country of some past practices at the same time.
Last week, the pressure on banks for lower interest rates intensified.
The January inflation rate came in below expectations, but on an annual basis inflation was still stuck in double-digit territory at 10.35 percent.
The government claims that new incentives it recently announced will boost economic activity in Turkey in 2018. But these incentives alone will not be enough unless the economy manages to secure the necessary volume of external funds.
The recent appreciation of the Turkish Lira against foreign currencies has been cited as an example showing that the markets have responded positively to the Turkish military’s operation in the northern Syrian district of Afrin. Actually it would be more correct to say that the markets have responded positively not to the operation itself – but rather to the fact that it was prompted by no huge argument with the United States, as had been feared.
The Turkish Central Bank’s decisions have attracted attention recently as the Turkish economy runs out of “success stories.
