Hande Firat: Economy as a cup half full and half empty
hande firat2
Editor’s Note: Hande Firat is very close to Erdogan and is one of the few columnist/journalists who retained some credibility. Her lengthy article is noteworthy because it probably reflects how the Palace thinks about the economy.
After the election, all eyes were turned to the new economy management without exception.
Today I wanted to review what has happened in the economy for the last two months. But as I do this, I will look at both the half-full and the empty side of the glass. However, I will deal with the issue not on a technical level, but in a way that we can all understand. Let's look at the good news first...
FOREIGN INVESTORS MEET AGAIN WITH TURKIYE
* As soon as Treasury and Finance Minister Mehmet Şimşek and CBRT President Hafize Gaye Erkan took office, a plan was drawn to rein in inflation, which seemed to have been left to its own devices. Annual inflation, which is estimated to be 58 percent at the end of the year, is projected to be 33 percent by the end of 2024.
* Foreign investors saw that the methods, plans and programs of the economy management were realistic and met Turkey “again” after many years. After the Gulf visits, the first investor meeting organized by JP Morgan was held in Istanbul.
ECONOMY MANAGEMENT PREPARES FOR ROAD SHOW
* Mehmet Şimşek will meet with important names at the investor meeting to be held by Goldman Sachs in the USA in September. I'm guessing London will be watching closely.
* In other words, the economy management is preparing for the road show. Regardless of where they are held, these meetings are where Şimşek feels at home with questions coming from the pages he studied.
INCREASING RESERVES
* The FX reserves of the CBRT are rising by several billion dollars every week. The increase in reserves, which are considered as a kind of "ammo" for both the CBRT and the national economy, increase confidence in Turkey. Şimşek signaled that reserve build-up will continue in line with market conditions last week.
* The current account balance gave a surplus of 674 million dollars in June for the first time after 20 months. There may be a return to the deficit again in the following month, but it is understood that the effects of the measures taken will gradually show their effect. The improvement in the current account balance is critical for the fundamental balances in the economy.
FOREIGN SHARE IS INCREASING IN BIST
* BIST is constantly breaking new records with foreign inflows. The foreign share is increasing a little more every week. Demand for initial public offerings have now reached incredible proportions. As the confidence in the capital markets increases, book building is announced for the public offerings of two or three companies every week.
* Maybe it was overlooked, but data releases by TURKSTAT, which have been questioned by various experts from time to time, now get full marks by market players. Analysts and economists, who scrutinize each figure, say that the data has been quite consistent for the last few months.
CREDIT RATING UPGRADE IS ON THE AGENDA
* In the past weeks, I have said that a rating increase may come to the fore. Moody's recently published a report. Along with some warnings, it drew attention to the successes of the economy management, giving the preliminary signals of a rating increase. Credit rating agencies are definitely doing a great injustice with the ratings they give to Turkey and keeping the country in the so-called "junk" area. I believe they will get rid of this error.
[embed]https://www.youtube.com/watch?v=c3fQZiI9Sj4&t=7s[/embed]
* For their own credibility, Turkey's ratings must be quite high. If our credit rating rises to the level we deserve, inflow of funds into Turkey will amplify while the cost of loans to be obtained by banks, companies and, for example, municipalities will decrease significantly.
THE EMPTY SIDE OF THE CUP
Now let's see what's on the empty side of the glass...
After the election, all eyes were turned to the new economy management without exception.
Today I wanted to review what has happened in the economy for the last two months. But as I do this, I will look at both the half-full and the empty side of the glass. However, I will deal with the issue not on a technical level, but in a way that we can all understand. Let's look at the good news first...
FOREIGN INVESTORS MEET AGAIN WITH TURKIYE
* As soon as Treasury and Finance Minister Mehmet Şimşek and CBRT President Hafize Gaye Erkan took office, a plan was drawn to rein in inflation, which seemed to have been left to its own devices. Annual inflation, which is estimated to be 58 percent at the end of the year, is projected to be 33 percent by the end of 2024.
* Foreign investors saw that the methods, plans and programs of the economy management were realistic and met Turkey “again” after many years. After the Gulf visits, the first investor meeting organized by JP Morgan was held in Istanbul.
ECONOMY MANAGEMENT PREPARES FOR ROAD SHOW
* Mehmet Şimşek will meet with important names at the investor meeting to be held by Goldman Sachs in the USA in September. I'm guessing London will be watching closely.
* In other words, the economy management is preparing for the road show. Regardless of where they are held, these meetings are where Şimşek feels at home with questions coming from the pages he studied.
INCREASING RESERVES
* The FX reserves of the CBRT are rising by several billion dollars every week. The increase in reserves, which are considered as a kind of "ammo" for both the CBRT and the national economy, increase confidence in Turkey. Şimşek signaled that reserve build-up will continue in line with market conditions last week.
* The current account balance gave a surplus of 674 million dollars in June for the first time after 20 months. There may be a return to the deficit again in the following month, but it is understood that the effects of the measures taken will gradually show their effect. The improvement in the current account balance is critical for the fundamental balances in the economy.
FOREIGN SHARE IS INCREASING IN BIST
* BIST is constantly breaking new records with foreign inflows. The foreign share is increasing a little more every week. Demand for initial public offerings have now reached incredible proportions. As the confidence in the capital markets increases, book building is announced for the public offerings of two or three companies every week.
* Maybe it was overlooked, but data releases by TURKSTAT, which have been questioned by various experts from time to time, now get full marks by market players. Analysts and economists, who scrutinize each figure, say that the data has been quite consistent for the last few months.
CREDIT RATING UPGRADE IS ON THE AGENDA
* In the past weeks, I have said that a rating increase may come to the fore. Moody's recently published a report. Along with some warnings, it drew attention to the successes of the economy management, giving the preliminary signals of a rating increase. Credit rating agencies are definitely doing a great injustice with the ratings they give to Turkey and keeping the country in the so-called "junk" area. I believe they will get rid of this error.
[embed]https://www.youtube.com/watch?v=c3fQZiI9Sj4&t=7s[/embed]
* For their own credibility, Turkey's ratings must be quite high. If our credit rating rises to the level we deserve, inflow of funds into Turkey will amplify while the cost of loans to be obtained by banks, companies and, for example, municipalities will decrease significantly.
THE EMPTY SIDE OF THE CUP
Now let's see what's on the empty side of the glass...
- THE MOST BASIC PROBLEM IS CONTROLLING INFLATION
- Foreign trade deficit and the financing problem in the current account balance must be resolved permanently in the medium term.
