Turkey: Lower Reserves and Higher Rates, but Market Turmoil Is Unlikely

Turkey: Lower Reserves and Higher Rates, but Market Turmoil Is Unlikely

Key takeaway – Despite declining reserves and increased interest rates, Turkey is unlikely to suffer a market-crash over the next 12 months. What happened? Since the July 2016 coup attempt, the reserves of the Central Bank of Turkey’s (CBRT) declined. Gross international reserves declined by 14 percent (by USD 14.5 bn, from USD 104.7bn to […]

Qatar: Six Countries Sever Diplomatic Ties, Gulf Unity Under Threat

Qatar: Six Countries Sever Diplomatic Ties, Gulf Unity Under Threat

   A. What happened? On June 4 2017, Saudi Arabia, the UAE, Egypt and Bahrain cut diplomatic ties with Qatar. The four Arab countries—joined a few hours later by Yemen and the Maldives—decided to: a) interrupt their diplomatic relations with Qatar; b) expel Qatar from the coalition currently fighting in Yemen; c) interrupt all transport links […]

Turkey’s Failed Coup: What’s Next?

Turkey’s Failed Coup: What’s Next?

photo: RadikalBlog Key takeaway – In Turkey, a coup attempt failed in less than 12 hours. President Erdoğan has declared that “the government is in control” and he is “not going to compromise”. What is next? Likely, Erdoğan’s popularity will increase, and constitutional changes will lead to a presidential system. Instability will continue, crackdowns on […]

Turkey: The Banking Sector Needs Profitability-Enhancing Reforms

Turkey: The Banking Sector Needs Profitability-Enhancing Reforms

photo: Jeremy Vandel Key takeaway – Turkey’s economy remains resilient, but low savings hinder growth prospects and weaken the banking sector. Turkish banks – essential for economic growth and job creation – need to raise additional capital by end-2016, but suffer from declining profitability. Meanwhile, macro risks are rising, driven by geopolitical risks, foreign exchange (FX) […]

Despite Political Headwinds, Turkey’s Economy Remains Resilient

Despite Political Headwinds, Turkey’s Economy Remains Resilient

photo: Moyan Brenn Key takeaway – Global and local tensions are taking a toll on Turkey’s political stability. The conflict in Syria, terrorist attacks, the refugee crisis, and President Erdoğan’s divisive efforts to transfer executive powers to the presidency are breeding instability. Over the past year, the investment climate has worsened. Investors’ confidence is diminishing. The […]

US Fed: It Is Not “The When”, It Is How Long It Will Take to Normalize Policy

Key takeaway – On September 16-17, the US Federal Reserve (Fed) will take a difficult decision: to hike rates for the first time in nearly a decade – or wait. It is a close call: US domestic economic conditions could justify tighter policy but remain fragile. While the GDP is growing, inflation is below the […]