Deterioration in economic data before elections

Right before the elections, it has been observed that the deterioration in economic data is continuing. 

Export data for the month of May, which was released at the beginning of the week, has created total disappointment. Exports in May fell 19 percent to $10.8 billion compared to the same month last year. The decline in exports was 8.3 percent in the first five months. 

Maybe because of this data, the day this was announced, an upward acceleration was seen in the foreign exchange rates. The dollar exchange rate went up to 2.70 Turkish Liras, whereas it had been below 2.60 liras in past weeks. Again on the same day, in the stock market, there were daily losses of over 3 percent, which was attributed to the tension in the markets.

Today, inflation figures for the month of May will be released. The Turkish Statistical Institute (TÜİK) announced last year in May that the consumer price index had increased 0.40 percent while the producer price index had decreased 0.52 percent. At the end of April this year, the increase in annual consumer prices was 7.91 percent. If the May figures come out as more than 0.40 percent, then the annual inflation rate will again be over 8 percent. 

This is a very high inflation rate for Turkey, when there was no high inflation in almost any other country after the global crisis. Even worse is that there is a general perception that the Central Bank, because of political pressure, cannot fight against inflation adequately. 

General lack of confidence 

We know that the Justice and Development Party (AKP) government is trying to prevent further deterioration in economic data so they will not be politically harmed before elections. For this reason, there is widespread hearsay in the market that public banks have stepped in and have been selling foreign currency in an attempt to curb the foreign exchange rates. 

As seen, even if the government is making such interventions, it does not succeed. 

Actually, while deterioration in economic data is being experienced, the tension of the markets related to economic management and the course of events is growing. Finally, the work stoppages and disputes experienced in the automotive sector, which has also spread to the petro-chemical sector, I think, was nurtured by a general environment of lack of confidence. 

Also, the seizure of Bank Asya by the Saving Deposit Insurance Fund (TMSF) last week as well as the statements issued afterward saying the bank was actually not in the negative was a decision that seriously concerned the markets. Both the domestic markets and international markets have closely monitored the bank’s potential seizure for the past year-and-a-half; with various justifications, only its management was seized and it was transferred to the TMSF exactly before the elections. International banks regarded this as a political decision and said this would affect the Turkish market negatively. 

The economy has increasingly been managed worse, and we naturally see more often the negative results of this.