Bi-Weekly Report 16-29 May 2017


President Erdogan resumes his role as Chairman of the ruling AKP party

Buoyant exports contain the deterioration of the current account in Q1:17 to 3.9% of GDP on a 12-month rolling basis



The current account deficit widened slightly to 2.5% of GDP on a 4-quarter rolling basis in Q1:17 from 2.3% at end-2016, in line with stronger domestic demand

The impending adoption of the unified pay scheme of the public sector threatens macroeconomic and financial stability



The 4-quarter rolling current account surplus narrowed to 3.8% of GDP in Q1:17 from 4.2% in Q4:16

The tourism sector continued to overperform in Q1:17, sustaining economic growth and the current account surplus



The reform drive is set to continue under Vucic's Presidency

The fiscal performance improved markedly in Q1:17, with the 12-month rolling deficit narrowing to 0.6% of GDP in March from 1.3% of GDP in December



A new Government finally takes office

Banking sector profitability improved in Q1:17, suggesting that the political turmoil has not affected activity



The opposition ended their Parliamentary boycott, and voted for a caretaker Government ahead of the June 25th parliamentary elections

The fiscal balance deteriorated slightly in 4M:17, due to pre-election expenditure slippage



A good start to the year for the tourism sector



The CBE proceeded with an across-the-board hike to its policy rates by 200 bps to dampen increasing demand-side pressures and anchor inflation expectations

The tourism sector is emerging from a deep crisis, mainly supported by more competitive prices and improved security conditions


Appendix: Financial Markets

Bi-Weekly Report 16-29 May 2017