Turkey: buy-out loans for conscripts
Just as Turkey’s central bank was starting to declare victory in its year-long battle to curb credit growth, there comes another catalyst for Turks to take out personal loans: new legislation that will allow men to buy exemption from military service.
The measures, outlined this week by prime minister Recep Tayyip Erodgan, will give men above the age of 30, who have not yet completed their compulsory service, the option to pay 30,000 lira ($16,325) instead. Continue reading »
Turkey’s economy: on fire
Turkey has outpaced China with first quarter output growth of 11 per cent – but its red-hot economy is more a headache for policymakers than a cause of celebration.
Thursday’s data, showing growth still driven mainly by consumer spending, will fuel doubts over the central bank’s unorthodox low-interest-rate attempt to cool the economy. With other data revealing the trade deficit at an all-time high of $10.1bn in May, there’s now no doubt about the scale of the central bank’s challenge in curbing domestic demand before it’s too late. Continue reading »
Turkey: what next for Erdogan?
Almost all the contenders in Turkey’s elections can claim to have won from Sunday’s results. The ruling Justice & Development (AK) Party has a bigger share of the vote and a third term in power – albeit with a reduced majority. The reinvigorated CHP opposition has more seats, and the nationalist MHP has at least held on to its parliamentary presence, despite a series of sex scandals. The pro-Kurdish BDP has gained too.
Investors are also happy, it appears. The lira strengthened, bond yields fell and the Istanbul Stock Exchange’s main equity index rose on Monday morning, as markets judged the result good for stability. Continue reading »
Turkish elections: Enjoy the party but watch out for the hangover
Turkey’s government is unlikely to change in this Sunday’s parliamentary elections. But but that has not stopped foreign investors having an attack of nerves ahead of the vote.
Worried about inflation and an unorthdox monetary policy, they have no doubt that the ruling AK Party will retain power – but are concerned about what might come next. Continue reading »
Turkey’s unorthodox monetary policy: time for a rethink?
Turkey’s policymakers will come under increasing pressure to raise interest rates and tighten fiscal policy once next week’s national elections are over, after receiving an unpleasant surprise in inflation data released just over a week before the vote.
Consumer price inflation rose 2.42 per cent month on month in May, more than double the expected increase, bringing the annual rate of inflation from April’s historic low of 4.13 per cent to 7.17 per cent.
The figures, released on Friday, will fuel fears that Turkey’s central bank is failing to stop the economy overheating with its unorthodox policy mix of low interest rates to deter capital inflows, and higher reserve requirements to rein in domestic demand. Continue reading »
Turkey: It’s consumer spending, stupid.
Much of the debate over Turkey’s unorthodox monetary policy has centred on whether increases in reserve requirements will have the desired effect of curbing rapid credit growth and stopping the economy overheating.
But Citigroup argues, in a note published last week, that the real problem is no longer the pace of overall loan growth – which banks are likely to limit to 25 per cent year on year after stern strictures from the central bank, ministers and regulators. Continue reading »
Dogan Yayin: cutting a branch to save the tree?
Has Aydin Dogan, the billionaire owner of Turkey’s biggest media group, finally settled his differences with the government? Continue reading »
Turkey: playing safe at the central bank
With so much stormy weather in global financial markets, Turkey wisely avoided controversy when it on Thursday appointed its next central bank governor.
While Erdem Basci has run into some criticism in the financial community as the architect of Turkey’s unorthodox monetary policy, he is a long-serving deputy governor and is seen as the continuity candidate. His appointment was widely expected and is likely to be welcomed by investors who feared the government might make a more overtly political appointment. Continue reading »
Turkey: melting Ottoman gold
Every evening, Ahmet Akamak or one of his extended family boards a flight to Istanbul, keeping a careful grip on a bag loaded with solid gold.
The former banker runs a network of shops in Turkey’s south-eastern city of Diyarbakir, buying second-hand jewellery from people in need of ready cash, and selling it as scrap to the dealers clustered in Istanbul’s Grand Bazaar. His trade has boomed in recent years, as high gold prices turned Turkey – the world’s fourth biggest market for gold jewellery – into a net exporter of the metal. Continue reading »
Turkey: still no reason to tighten
Durmus Yilmaz, Turkey’s central bank governor, will retire this month on a high note: inflation of 3.99 per cent in March is the lowest on record – and at a level that previous generations of Turkish savers and businessmen could only dream of.
The benign figure, lower than expected due to a drop in food prices, will be a boost for the ruling AK Party ahead of June elections, since decades of double digit inflation has made voters acutely sensitive to inflation and exchange rates.
It may also ease pressure on the central bank to raise interest rates. Continue reading »
Turkey: first blood in arguments over unorthodox monetary policy
The arguments in Turkey over the central bank’s controversial monetary policy are getting personal.
On Thursday, Ersin Ozince, the conservative chief executive of Isbank, Turkey’s largest non-state bank, unexpectedly resigned after more than 30 years in the group – 13 of them as chief executive. He hasn’t said why he is going – but he quit the day after he criticised the authorities for trying to cool the economy by tightening controls on banks instead of applying standard policies and raising interest rates. Continue reading »
Time to tighten? Turkey’s red hot GDP
How much longer can the Turkish central bank stick with its outlandish monetary policies? Not much longer, surely, if Thursday’s red hot GDP figures are followed by further evidence of economic overheating.
Turkey’s economy boomed in the last quarter of 2010, with year on year growth of 9.2 per cent, outstripping forecasts and fuelling fears that the central bank will have to take tougher measures to cool inflationary pressures. Gross domestic product grew 8.9 per cent over the year as a whole, making Turkey one of the world’s fastest growing economies in 2010.
Turkey’s Frank Sinatra: hit by mob?
An outpouring of public sympathy followed this week’s shooting of Ibrahim Tatlises, a singer often known as Turkey’s Frank Sinatra. But the attack, apparently by paid hitmen, also served as a reminder of the shadier side of Turkish business.
Turkish rates: jury still out
Turkey’s central bank stepped in again this week to clear confusion over the effects of its unorthodox monetary policy, after the release of data that appeared to contradict comments made by officials.
The trouble was caused by balance of payments data: It showed portfolio inflows of $2.3bn in January, higher than a year earlier and at odds with official claims that some $10bn of “hot money” had left the country since December, when the central bank began “quantitative tightening” to deal with macroeconomic imbalances. Continue reading »
[update] Turkey: tough nuclear choices
Turkey’s energy minister has sought to forestall an anti-nuclear backlash, telling broadcasters the failures at Japan’s Fukushima atomic power plant would not affect plans to make nuclear energy the mainstay of domestic power production.
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