Turkey Country Report Jun17 - June, 2017

USD $475.00
Turkey Country Report Jun17 - June, 2017

Turkey’s GDP growth recovered in the first quarter to 5%, springing back from a drop of 1.3% just two quarters ago, while calendar-adjusted industrial production index moved up by 6.7% y/y in April, marking the best growth in output recorded in 20 months and exports surged 16% y/y in May.

Business confidence index rose 3% m/m to 112.4 in June, the highest level recorded since May 2014’s 113.5. The capacity utilisation rate (CUR) of Turkish manufacturing rose further to 79% in June, the highest figure recorded since August 2008’s 81.9%.

Leading indicators hint at a strengthening economic recovery in the second quarter, the central bank said on June 22 in the minutes of its latest Monetary Policy Committee (MPC) meeting.

President Recep Tayyip Erdogan, meanwhile, continues to rule by decree under a state of emergency introduced almost exactly a year ago after Turkey's failed coup attempt. After the country’s largest business association raised anxieties about its duration, he defiantly declared, “The state of emergency will never end — not until there is peace and welfare in the country”. Also giving some investors the jitters when it comes to the security of investments placed in Turkey is the fact that the president, having narrowly won April's referendum on introducing an executive presidency, now has the authority to essentially control the executive, the legislature and the judiciary, with near-total judicial and parliamentary immunity.

Add to those anxieties Ankara's ongoing spats with the EU over its receded prospects of membership, the jailing of journalists and seizing of businesses, the massive purges against anybody and everybody allegedly associated with the Gulenist network the government claims was behind the failed putsch, and rows with Washington over the arming of Kurds in the Syria conflict – it is easy to see why Erdogan might have felt the need to flood the veins of the economy with loose credit, tax cuts and other stimuli. But, for now, it's paying off.

Ministers certainly face an unenviable set of woes in the struggle to maintain expansion in Turkey, weighed, among other things, by an absence of much-needed foreign direct investment. Foreign investors fear structural economic reform is taking a back seat and partly as a consequence FDI fell from 2007's record bn to .3bn last year.

Other big difficulties include double-digit annual inflation (although in June it eased to 10.90% from 11.72% in May) and a substantially weakened Turkish lira, which has toppled from 2.83 to the dollar to as low as 3.94 in the past year, though it has lately been trading at closer to 3.50.


Table of Contents

1.0 Executive summary
2.0 Politics
2.1 Turkish opposition leader declares European court challenge while marching to Istanbul
2.2 EU parliament calls for suspension of membership talks with Turkey
2.3 Ankara protests to Berlin over art installation targeting Erdogan
2.4 Erdogan discusses Qatar crisis with Trump
2.5 Turkey dismisses report it advanced big troop reduction plan at Cyprus talks
2.6 Turkey, Russia reportedly agree S-400 missile system deal, loan issue yet to be solved
2.7 Picture for media freedom increasingly bleak
2.8 Politics - misc
2.9 Polls & Sociology
3.0 Macro Economy
3.1 Macroeconomic overview
3.2 Macro outlook
4.0 Real Economy
4.1 Industrial production
4.2  Inflation
4.2.1 CPI dynamics
4.2.2 PPI dynamics
4.3 Production dynamics & PMI
4.4 Fixed investment
4.5 Labour and income
4.5.1 Labour market, unemployment dynamics
4.5.2 Retail sector dynamics
4.5.3 bne despair index
5.0 External Sector & Trade
5.1 External sector overview
5.2 Balance of payments, current account
5.2.1 Import/export dynamics
5.2.2 Current account dynamics
5.2.3 Gross international reserves
5.3 FDI
6.0 Public Sector
6.1 Budget
6.1.1 budget dynamics - specific issues
6.1.2 budget dynamics - tax issues
6.1.3 budget dynamics - privatization, govt funding
6.2 Debt
6.2.1 Private debt dynamics
6.2.2 Public debt dynamics
7.0 FX
7.1 FX - specific issues
8.0 Financial & capital markets
8.1 Bank sector overview
8.1.1 Earnings
8.1.2 Loans
8.1.3 NPLs
8.1.4 Banks specific issues
8.1.5 Banks news
8.2 Central Bank policy rate
8.3 Stock market
8.3.1  ECM news
8.4 International ratings
8.4.1 International ratings - specific details of rating actions corp/regional etc
8.5 Fixed income
8.5.1 Fixed income - bond news
9.0 Industry & Sectors
9.1 Sector news
9.1.1 Oil & gas sector news
9.1.2 Automotive sector news
9.1.3 Transport sector news
9.1.4 Construction & Real estate sector news
9.1.5 Agriculture sector news
9.1.6 Tourism sector news
9.1.7 Utilities sector news
9.1.8  Metal and metallurgy sector news
9.2 Corporate news
9.2.1 Oil & gas corporate news
9.2.2 Automotive corporate news
9.2.3 Transport corporate news
9.2.4 Retail corporate news
9.2.5 TMT corporate news
9.2.6  Other corporate news

Number of pages: 77
Release Date: Mon, 10 Jul 2017