EM by EM #7 Is Turkey to TRY a pivot?
As we concluded our recent Turkey election blog this week, we thought it would be appropriate to make a wrap-up piece on where we see markets going and the current economic situation in Turkey- which is anything but boring, to say the least.
This global cycle has been tough on the usual suspects within the EM space: those lacking fiscal discipline, large energy importers, and (pseudo)-authoritarian leaders relying on unconventional economic policies.
Unfortunately in the case of Turkey, the latter two are in full effect. Tax hikes or government spending cuts may be painful but taxpayers are consumers too- and the ones with the weakest backs are paying the highest price (pun intended):
Chart 1: Turkey Inflation Composition
As the Lira is trying to outcompete the depreciation of the Venezuelan Bolivar and the volatility of dogecoin, we provide our view and assessment of the near-term impact of Erdogan’s narrow victory. Markets were not impressed by the outcome but will the skepticism remain the prevailing narrative?
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