Ana sayfa English Edition How long will the window opportunity for markets remain open?

How long will the window opportunity for markets remain open?

Following the repeat election for Istanbul Mayor on 23 June, Turkey leaves behind a challenging and exhausting period of elections. With Ekrem İmamoğlu, the candidate for the Millet (the Nation) alliance, winning the election decisively, any political ambiguity in this regard has been cleared, bringing the nation’s focus back to the economy

The initial reaction of the markets to the election outcome indicates that the Turkish Lira rose against the dollar, with the rate moving down to TL 5,71 on Monday right after the elections, from the pre-election Friday rate of TL 5,82. Also on the first work day after the election, Borsa Istanbul started the day with a 2 percent increase, and the banking index at opening rose by 4.2 percent. All of these indicate that the dollar, which slid on the international market, also slackened against the lira.

FED eases developing

But have all the negativities standing in the way of the markets been eradicated? The US Federal Reserve’s (FED) announcement that it will likley announce rate cuts contributed to the markets’ rallying. As it is well known, the FED had announced that it will issue three rate hikes in 2019. The u-turn rom FED has been excellent news for developing markets. However, economists say that Turkey still has a ton of homework to do before benefitting from the positive atmosphere prevailing internationally.
A recent newsbulletin issued by İş Yatırım, a leading investment agency in Turkey, notes that Turkey has ceased a golden opportunity to leave populist policies behind and focus on the ongoing reform process. The report says that “A Turkey that will focus on the economy and reforms until the presidential elections of 2023 can become Xa center of attraction for global cash once aga’n, if it can also resolve tensions with the US over its plans to purchase S-400 defense systems.”

‘Focusing on reforms
will be decisive’

Experts note that these recent developments have opened a new window of opportunity, underlining that nobody really knows until when it will remain open. Undoubtedly, the course talks between the US and China will take at the G20 summit in late June, and whether there will be any forward movement in talks between President Tayyip Eerdoğan and US President Donald Trump over the S-400 issue during the duo’s talks, will give the first clues as to how long this window will remain open. As our newspaper goes to print before these meetings take place, we can’t comment on the outcome, but economists say that over the long term the real determinant for Turkey’s economy will be whether the country starts focusing on reforms by letting aside populist policies.
Pointing out that Turkey has a period ahead with lower interest rates and lower cost, experts urge the country’s economy management to focus on what can be done to make use of this positive situation, looking back at and learning from practices implemented in similar periods in the past.