Turkey:  Growth will be hard to come by…

After reading Monday’s 3Q2020 GDP figures, which heralded 6.7% real growth vs 2Q, I realized I’m already missing former economy czar Berat Albayrak. Had he been in his post, he would have turned twitter ablaze with flood after flood embellishing Turkey’s outstanding growth record, and promising  final victory against the Sinister Foreigners who ceaselessly attempt to trip Turkey on its way to becoming the Great Success Story of the 21st Century.


I plan to save today’s GDP analysis reports, which I’m sure will include numerous econometric projections and Excel sheet extrapolations to pronounce Turkey’s recession over.

Nope, it is not over. In fact, Turkey’s double dip already started in November, to  turn into a gut-wrenching and impoverishing recession in 4Q2020 and 1Q2021. If President Erdogan is still in power by then (May He live for 10K years), the bounce-back is going to be weak, narrowly spread  and unnoticed on the Street.


November survey data already bears the seeds of a deep recession.  Consumer and manufacturing sector confidence is down. So are 2 of the three sectoral PMIs Turkstat collects data on.  Also today, Turkey’s Conservative Businessmen Association (It is ok for conservatives to discriminate on the basis of gender) released its November composite PMI, titled SAMEKS or PUMAX, depending on whether Turkey is on friendly terms with the West or not, which sank to 49, i.e. recession territory.


For the last two data weeks credit volume ceased to grow, with annualized growth rate declining to 8%, or roughly 4 points slower than official CPI, which is as good a data as the daily Covid-19 “case” tallies announced by Health Minister Mr. Fahrettin Koca.  According to experienced banker and columnist for ParaAnaliz.com, our Turkish sister site, Mr. Erol Tasdelen,  non-performing plus barely performing loans, also called comatose loans, reached 14.5% of the total, or a nifty $65 bn.  How the tiny commercial banking system of   Turkey would provision for these losses or raise capital is a quandary. Since they can do neither, Turkey is set to enter a loan draught, reminiscent of the Dust Bowl in Great Plains in 1930s.


As they say, “No pain, no gain, no loans, no growth”.  But, the holes in the banking systems’ balance sheet is a minor concern. The big bomb is the raging Covid-19 epidemic, which is claiming at least 60K victims a day, if “opposition physicians” are to be believed.  I don’t quite understand what “opposition” means when it comes to the science of medicine, but presume in this context it is any doctor who dares to challenge Dr Koca’s daily case figures.


Rumor has it that our Beloved and Eternal President Mr. Erdogan will announce new social mobility restrictions after Monday’s Cabinet meeting.  According to veteran Ankara affairs correspondent Mr. Muharrem Sarikaya, who writes for Haberturk digital daily, “The Ministry doesn’t even contemplate national lockdowns”.  Well, this is exactly the reason why Turkey stumbles even at the slightest of shocks and falls on her face  when something major goes wrong:  Forward thinking is taboo.


I assure you Our Beloved and Eternal President Erdogan will be forced to declare a 2-4 week national curfew when he faces a voter revolt.  A revolt caused by voters whose dear ones are dying at home without medical care and…and there is a waiting line in state-run   mortuaries.


You know the rest.  When you shutter a whole economy, some “opposition” workers and companies go unemployed and bankrupt. It will cost a pretty penny to pay them unemployment insurance and provide financial aid for small businesses.  Alas,  Berat Albayrak bankrupted the Treasury by piling stimulus on a recovering economy in 3Q, meaning that there is no cash left  for the winter. Turkey can’t do QE, either.   In fact, the Central Bank is currently tightening monetary policy to stabilize the sickly currency.


Ergo, a deep and painful Winter of Our Discontent.  “Don’t you worry” most economists will tell me. “The vaccine is just around the corner and  thanks to abolishing the non-sensical restrictions on financial transactions (Do I need to say?  Another wonderful legacy of Berat Albayrak) hot money will soon stoke a roaring recovery. No, it won’t.  There will never be a recovery when The Beloved and Eternal President of a country plans to sink $30 bn into a trench called Canal Istanbul which will connect Oblivion to White Elephant-ville.


Damon H Grande


WATCH:  Turkey’s winter recession started TODAY


WATCH:  Turkey: The only reform we need is Mr Erdogan to retire

Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and www.paraanaliz.com and has contributed to the financial daily Referans and the liberal daily Radikal.