Turkish government likely to hold economy together till elections - Ash
Turkey’s government is lilkely to hold the economy together now that President Recep Tayyip Erdoğan has called elections for June 24, Tim Ash, senior emerging markets strategist at Blue Bay Asset Management in London, told Ahval TV.
“From a market perspective, it’s a two-month period,” Ash said from the IMF and World Bank’s annual meetings in Washington DC. “That looks doable. It’s possible for them to hold it together until that date.”
Ash, speaking with Mark Bentley, the former head of news for Bloomberg News in Turkey, and economist Güldem Atabay, said he would now expect the central bank to take a decisive step at a meeting of its Monetary Policy Committee on Wednesday. Further measures to rebalance the economy will probably be taken by the government after the poll, he said.
“They have to do something and it can’t be insignificant,” Ash said. “After the election, surely if he’s won the election, logic would suggest that he’d be more willing to rebalance. Let’s just wait and see what happens on the 24th.”
Turkish inflation has accelerated into double digits, about three times the emerging market average, and the current account deficit widened to almost 6 percent of GDP, raising concern that the economy is overheating and would head for a hard landing. The lira weakened to a record low of 4.17 per dollar just before Erdoğan called the election.
Bentley drew attention to troubles in the real estate sector, saying financial issues there were reflective of larger economic problems. Post-election, Turkish corporates may have difficulty restructuring their debt unless both domestic demand stays healthy and the exchange rate stays stable, meaning the government must follow prudent economic policies, he said.