As I have mentioned last week, Government has signalled readiness for early local elections in autumn.
Turkey has gone through so many elections over the last 15 years that I think it would for the benefit of all to hold both general and local elections at regularly scheduled dates and not to hold another one until the term stipulated by the Constitution is over.
That is to say, some sort of conflict always arises before each election between Turkish Government and its trading-diplomatic partners, involving the exchange of harsh statements and confusing comments on the economy, which naturally results in sharp market fluctuations, rises in exchange rates-interest rates-inflation and in the postponement of investments to an unknown future date. Therefore, setting local elections for an earlier date would be beneficial to markets as well.
Now a quick look at the inflation data expected to be released today. I honestly do not hope for a comforting CIP and PPI. Besides, we should not have such expectations anyway according to the data issued by Istanbul Chamber of Commerce. But, what we really hope to learn very soon is the list of new economy officials. Still no news about that… (TURKSTAT released PPI data just 20 mints ago: the number is not bright. 15.39 %. I will comment on this tomorrow)
“Don’t try this at home!”
At the Turkish Exporters’ Assembly elections, the delegates made clear that they want Turkey to write a new narrative. They quite simply want to be proud of Turkish design, brands, innovation, value-added content, and of course they want to boast about high profits, not just about barren numbers and figures. They hope to see Turkey finally abandons import-led growth model and switches to the new Turkey Model running a trade surplus. Business people made it quite clear that Turkey must get rid of this useless and non-functional growth model in order to embrace a better future.
Manufacturing industry and consumer trend indexes seem to be improving, which is very promising for the future. I must say that I am expecting around 5% year-end growth.
CBRT should not let the numbers-to be released today-be the determinative factor in their decision-making. Inflation will continue to rise for a little while longer. Attempting to reduce it through rates hikes would lead to severe side effects. Never ever try this at home even though you were strongly suggested to do so since the current dynamics are nothing like the former ones.