TR Economy & Updates

[Chocopie]

One consortium is moving ahead (can be discussed further in that thread):

Indian Economy + Infra Archive

https://www.hindustantimes.com/india-news/indigo-orders-500-aircrafts-allies-with-turkish-airlines-to-expand-in-europe-101676692832585.html The deal to acquire 500 aircrafts was made with Airbus and Boeing which will allows the airline to fly to around 27 destinations in the continent. In...

defencehub.live

It will be interesting to see what a ~ 10 billion dollar incentive will bring in and grow in today's relatively ensconced setting that you described.

This is why there is a larger problem w.r.t Turkiye given its current lack of financial health in forex, venture capital and fiscal room in the scales needed.....due to economic mismanagement that has been discussed for many pages prior in this thread.

The JV doesn‘t look promising. Vedanta is a mining & metal company, Foxconn an electronics contract manufacturer: both without chip fab expertise. They tried to get European STMicro with licensed 40 nm tech on board … sceptical if this might be a scheme to grab Indian gov subsidies.

And Terry Gou, the batshit crazy Foxconn CEO is a rabid Korea- and Samsung-hater, hahaha. Once he bought ailing Japanese Sharp to beat Samsung in the display market. National Chinese right-wing extremist in bed with mainland CCP.

David Reed might be an experienced semicon veteran, but he can‘t do the heavy lifting alone. Got to hire hundreds of high profile, top earning chip facility process experts. Any country trying to jump on the semicon bullet train needs billions of $$$.

 

[Nilgiri]

I'll continue (India specific) discussion on it in the other thread.

My point is the larger difficulty for Turkiye here given they have their inflation rate, forex, fiscal room where they are currently by mismanagement here over a protracted period that will make things very difficult compared to say India in this sector and a number of other sectors.

Turkiye will have to work on addressing all of that. It is long conversation of itself in this thread.

Folks can search my replies and ppl like anmdt et al within this thread.

 

[Bozan]

https://twitter.com/i/web/status/1650920550787588110

"Almost all of the $50 million > qualified investments I have been trying to attract to Turkey for about a year have been postponed due to negative electoral scenarios. The situation is no different in the country, even public financial institutions are waiting for the election to approve many projects"

 

[Sanchez]

All this BS talk about onion vs national security. You can't have national security without the onions.
TSK is probably at its worst funded time of the last 100 years. Billions worth of R&D budget doesn't account for the hole in the army's pocket.

https://twitter.com/i/web/status/1651161633689939968

"....When we look at Turkey's defense expenditures, there is an increase in Turkish Lira, according to open source and government data.

However, its ratio to GDP has been decreasing for some time. When we look at the dollar basis, we can see the same decrease:

Why is there such a decline? I guess the answer is obvious. So how does this affect the defense industry?

Assuming that the money spent on procurement falls and this trend continues, we can say that the defense market has contracted.

In this case, either fewer companies will be supported, or fewer tools will be purchased from all of them to support all existing companies. The latter situation may increase the unit price. Moreover, the unit price will increase in systems with foreign inputs. In this case, less system can be taken. Or, payments to companies may be delayed, and they may be asked to use their own resources for a certain period of time.

I'm not saying this will happen, I'm saying it could happen. In this case, companies will have to rely more on exports to maintain their assets.
If the first case is to happen, then we may see a restructuring in the defense industry. In times when defense expenditures contract, we see that the number of companies generally decreases.

We are very focused on systems at the moment, but the decrease in spending is an important situation. It can lead to changes in the industry. I guess we'll see what happens next."

 

[what]

Kemal Derviş, economist, 1949-2023

He was the architect of IMF-backed progress subsequently reversed by Erdoğan

www.ft.com

Kemal Derviş (pronounced Dervish), the Istanbul-born economist who launched the ambitious restructuring of the Turkish economy after a devastating devaluation in 2001, has died aged 74. Derviş, who suffered from Parkinson’s disease, rose to international prominence as the architect in his native Turkey of one of the world’s most successful IMF stabilisation programmes following a 22-year career at the World Bank in Washington. So powerful were the vested interests he challenged with the establishment of apolitical market regulators that the newly-minted minister of state for the economy took to wearing a bulletproof vest, recalls Ajay Chhibber, the World Bank representative in Ankara who worked closely with him during his 17 months in office. Turkish newspapers at the time of his appointment by then prime minister Bülent Ecevit described the cosmopolitan polyglot as everything from “bionic” to “the last Turk the world has any confidence in”. A political novice, Derviş explained painful reforms with a clarity and sincerity that resonated with ordinary Turks after decades of economic mismanagement under a succession of shaky coalition governments.

 

[Baklava Consumer]

Turkey will probably default on its debt in 6-8 months, tourism in the summer may help, but winter things are going to be crazy.

The central bank has run out of foreign reserves and has recently started selling the gold reserves to make sure the dollar doesn't rise during the elections - so that Erdogan doesn't look bad.

The government will go into a balance of payments crisis, which is already happening, but this time, it will be systematic.

Here in this picture the government is running a -382 billion Lira budget deficit which they have to go the the central bank to finance - or use international creditors for things like Eurobonds which want 10%-20% interest payments (very expensive).

And since April 1st the Turkish central bank has sold $17,7 billion USD to stop the lira from devaluation.

Erdogan doesn't have the credibility or the team to change this economy anymore, raising interest rates will not fix this situation.
Under these circumstances (Erdogan will most likely win), I expect Turkey to default on its debt payments and run out of FX reserves in 6-8 months - things will get pretty bad (look at Lebanon and Sri Lanka).

 

[what]

The election spending, wage rises, pensions, the deferred gas payments, the current account deficit, inflation - it's going to get interesting to say at least.

 

[TheInsider]

After the elections, there will be a big bill to pay. The economy is going from bad to worse. There is and incoming price increase and devaluation.

 

[Nilgiri]

Turkey will probably default on its debt in 6-8 months, tourism in the summer may help, but winter things are going to be crazy.
View attachment 57458
The central bank has run out of foreign reserves and has recently started selling the gold reserves to make sure the dollar doesn't rise during the elections - so that Erdogan doesn't look bad.

The government will go into a balance of payments crisis, which is already happening, but this time, it will be systematic.
View attachment 57459
Here in this picture the government is running a -382 billion Lira budget deficit which they have to go the the central bank to finance - or use international creditors for things like Eurobonds which want 10%-20% interest payments (very expensive).

View attachment 57460
And since April 1st the Turkish central bank has sold $17,7 billion USD to stop the lira from devaluation.

Erdogan doesn't have the credibility or the team to change this economy anymore, raising interest rates will not fix this situation.
Under these circumstances (Erdogan will most likely win), I expect Turkey to default on its debt payments and run out of FX reserves in 6-8 months - things will get pretty bad (look at Lebanon and Sri Lanka).

I don't think a default is going to happen, though Turkiye will come under further economic strain for sure.

The largest foreign policy activity concerning this will likely be Turkish administration approaching more gulf countries for capital account funding by either SAFE (State administration of Foreign Exchange) deposits and/or currency swaps.

It is unlikely this will occur with any others (West, China, East Asia) given current geopolitical and economic climate (a long topic to get into)

Gulf countries on the other hand have ample reason to improve relations with Turkiye and/or extract more concessions and political capital (from say Erdogan admin) by doing so.

Their 5 largest sovereign wealth funds :

ADIA (UAE) ~ 700 billion USD
KIA (Kuwait) ~ 700 billion USD
PIF (KSA) ~ 580 billion USD
QIA (Qatar) ~ 450 billion USD
ICD (UAE) ~ 300 billion USD

Its unclear what state of leveraging these are all at with their own domestic and other commitments though....but just to give an idea of what I feel Turkiye will approach (given its now poor international credit rating) in greater capacity now past what it has dabbled so far with sukuk bonds and some currency swaps mostly with these same countries.

The drop in Turkish forex is starting to look very concerning (given its trade, investment and GDP denominators):

Turkey Gross Foreign Exchange Reserves

Foreign Exchange Reserves in Turkey decreased to 93010 USD Million in November 1 from 93510 USD Million in the previous week. This page provides the latest reported value for - Turkey Foreign Exchange Reserves - plus previous releases, historical high and low, short-term forecast and long-term...

tradingeconomics.com

Looking at bare minimum ratios that other developing countries under financial stress have had recently or in the past..... TR will want to stabilise at least above 50 billion given its imports are ~300 billion a year and more importantly with the CAD trend where it is:

Turkey Current Account Balance, 1992 – 2024 | CEIC Data

Turkey Current Account recorded a surplus of 4.3 USD bn in Aug 2024, compared with a surplus of 778.0 USD mn in the previous month.

www.ceicdata.com

i.e it will need about 50 - 100 billion injection (depending on current account performance this year compared to 2022) on capital side this year to handle both this and the capital account debt repayments given what its burning through on both current account side and domestic fiscal side.

This is a malady that has been allowed to get to this stage...by reasons long discussed in this thread.

 

[Baklava Consumer]

I don't think a default is going to happen, though Turkiye will come under further economic strain for sure.

The largest foreign policy activity concerning this will likely be Turkish administration approaching more gulf countries for capital account funding by either SAFE (State administration of Foreign Exchange) deposits and/or currency swaps.

It is unlikely this will occur with any others (West, China, East Asia) given current geopolitical and economic climate (a long topic to get into)

Gulf countries on the other hand have ample reason to improve relations with Turkiye and/or extract more concessions and political capital (from say Erdogan admin) by doing so.

Their 5 largest sovereign wealth funds :

ADIA (UAE) ~ 700 billion USD
KIA (Kuwait) ~ 700 billion USD
PIF (KSA) ~ 580 billion USD
QIA (Qatar) ~ 450 billion USD
ICD (UAE) ~ 300 billion USD

Its unclear what state of leveraging these are all at with their own domestic and other commitments though....but just to give an idea of what I feel Turkiye will approach (given its now poor international credit rating) in greater capacity now past what it has dabbled so far with sukuk bonds and some currency swaps mostly with these same countries.

The drop in Turkish forex is starting to look very concerning (given its trade, investment and GDP denominators):

Turkey Gross Foreign Exchange Reserves

Foreign Exchange Reserves in Turkey decreased to 93010 USD Million in November 1 from 93510 USD Million in the previous week. This page provides the latest reported value for - Turkey Foreign Exchange Reserves - plus previous releases, historical high and low, short-term forecast and long-term...

tradingeconomics.com

Looking at bare minimum ratios that other developing countries under financial stress have had recently or in the past..... TR will want to stabilise at least above 50 billion given its imports are ~300 billion a year and more importantly with the CAD trend where it is:

Turkey Current Account Balance, 1992 – 2024 | CEIC Data

Turkey Current Account recorded a surplus of 4.3 USD bn in Aug 2024, compared with a surplus of 778.0 USD mn in the previous month.

www.ceicdata.com

i.e it will need about 50 - 100 billion injection (depending on current account performance this year compared to 2022) on capital side this year to handle both this and the capital account debt repayments given what its burning through on both current account side and domestic fiscal side.

This is a malady that has been allowed to get to this stage...by reasons long discussed in this thread.

Yeah no single country or group of countries would inject $50B-$100B in the Turkish economy. The government would either have to go to the IMF, or end up like Lebanon or Sri Lanka.

 

[Merzifonlu]

IMO, If we can't find an energy source large enough to close the current account deficit, we are in big trouble economically. Because tourism revenues, especially this summer, will remain very low due to a combination of many factors.

The main reasons are as follows: The economic destruction of both Ukraine and Russia due to the Ukraine war, the fear of western tourists due to the AKP's image abroad, the collapse of the AKP's foreign policy towards the Middle East, and global stagflation.

 

[Baryshx]

I don't care about the economic crisis, these people deserve it. Akp's biggest vote depot is the poor people.

Rich and educated people already vote for chp. These people can leave the country at any time.

By the way, most of the people in Tusaş, Tei, Aselsan and Roketsan are from chp, educated and graduated from ODTÜ and İtü schools. They have no ties with Akp, it would be a huge blow to the defense industry that we are so proud of. If the country turns into Venezuela or Lebanon, you cannot keep these people in the country.

Akp is already allergic to educated people and sees them as a group that causes a decrease in its vote rates. They are of a mentality that once called ODTÜ and İTU terrorist nests and defended their closure.

In addition, the Arab countries and Turkic republics, which we are guarding and protecting, will give dollar support.

Why should tourists come to a country full of Syrian and Afghan terrorists?

 

[fushkee]

The economy will be worse and the worst. Maybe like Argentina. The situation in Argentina is very teaching for those who want to see. The inflation is now chronic. None of any structural reforms in financial and law does effect the economy in good way. They will be living with it maybe forever.

And our economy is on the way of becoming Argentina if necessary precautions wouldn't be taken on time. Apparently, government will keep going it this way. It seems that the economy will go down traumatically. Inflation, hidden devaluation will be chronic, maybe.
I am expecting more releases is every sector. People will look for new opportunities abroad.

 

[Agha Sher]

Firet all these new CHP election accounts were polling experts. Now they’ve all become economy experts without understanding the basics.

give it a rest guys

 

[Kitra]

The economy will be worse and the worst. Maybe like Argentina. The situation in Argentina is very teaching for those who want to see. The inflation is now chronic. None of any structural reforms in financial and law does effect the economy in good way. They will be living with it maybe forever.

And our economy is on the way of becoming Argentina if necessary precautions wouldn't be taken on time. Apparently, government will keep going it this way. It seems that the economy will go down traumatically. Inflation, hidden devaluation will be chronic, maybe.
I am expecting more releases is every sector. People will look for new opportunities abroad.

High inflation have been chronic for at least 50 years, hence the reason to remove 6x0 in our currency. it will remain so until we actually start producing high value export products, stop our over consumption of luxury products and stop dependency on external energy.

Also, everyone knows that we will pay for the election economy wirh very high inflation.

 

[fushkee]

I summarised the possibilities in our future. If we keep implementing implausable economy model, the direction would be never different. Lower interest rates, more inflation. Besides that, incompetent leaders in economy like people who are Minister of Economy, Head of Central Bank, etc. will absolutely cause to become much deeper economical crises in Turkiye.

 

[Bozan]

I don't think a default is going to happen, though Turkiye will come under further economic strain for sure.

The largest foreign policy activity concerning this will likely be Turkish administration approaching more gulf countries for capital account funding by either SAFE (State administration of Foreign Exchange) deposits and/or currency swaps.

It is unlikely this will occur with any others (West, China, East Asia) given current geopolitical and economic climate (a long topic to get into)

Gulf countries on the other hand have ample reason to improve relations with Turkiye and/or extract more concessions and political capital (from say Erdogan admin) by doing so.

Their 5 largest sovereign wealth funds :

ADIA (UAE) ~ 700 billion USD
KIA (Kuwait) ~ 700 billion USD
PIF (KSA) ~ 580 billion USD
QIA (Qatar) ~ 450 billion USD
ICD (UAE) ~ 300 billion USD

Its unclear what state of leveraging these are all at with their own domestic and other commitments though....but just to give an idea of what I feel Turkiye will approach (given its now poor international credit rating) in greater capacity now past what it has dabbled so far with sukuk bonds and some currency swaps mostly with these same countries.

The drop in Turkish forex is starting to look very concerning (given its trade, investment and GDP denominators):

Turkey Gross Foreign Exchange Reserves

Foreign Exchange Reserves in Turkey decreased to 93010 USD Million in November 1 from 93510 USD Million in the previous week. This page provides the latest reported value for - Turkey Foreign Exchange Reserves - plus previous releases, historical high and low, short-term forecast and long-term...

tradingeconomics.com

Looking at bare minimum ratios that other developing countries under financial stress have had recently or in the past..... TR will want to stabilise at least above 50 billion given its imports are ~300 billion a year and more importantly with the CAD trend where it is:

Turkey Current Account Balance, 1992 – 2024 | CEIC Data

Turkey Current Account recorded a surplus of 4.3 USD bn in Aug 2024, compared with a surplus of 778.0 USD mn in the previous month.

www.ceicdata.com

i.e it will need about 50 - 100 billion injection (depending on current account performance this year compared to 2022) on capital side this year to handle both this and the capital account debt repayments given what its burning through on both current account side and domestic fiscal side.

This is a malady that has been allowed to get to this stage...by reasons long discussed in this thread.

There isn't enough gulf money to fund it.

That being said, the foreign policy will be for sale!

 

[Nilgiri]

Yeah no single country or group of countries would inject $50B-$100B in the Turkish economy. The government would either have to go to the IMF, or end up like Lebanon or Sri Lanka.

IMF and Erdogan admin will find zero common ground....as the latter will simply not reverse the low interest rate policy that in large part worsened this deep mess to begin with.

So there is no chance of IMF being involved in foreseeable future. The meeting ground is burned and salted already basically.

I mention the gulf countries because thats where Turkiye has mostly been able to sell its sukuk bonds (well past its regular bonds) and arrange currency swaps to essentially buy time till this election being done now.

It was not small amount of money, some 10's of billions of dollars so far.... I'd have to look into it for exact amount, but the matter stands that they are the likeliest option for continued funding to keep ship afloat.

Even on this forum, lot of members miss the woods for the trees by focusing on smaller sectors of their particular interest rather than learn about the larger economy (and its deep systemic problems) and call out those issues fairly to powers that be.

Overall a lot (cost and impact wise) depends on what specifics play out post election:

Turkish default protection costs soar as Erdoğan leads presidential vote

Cost of credit default swaps records biggest rise in two years, while bonds sell off

www.ft.com

 

[Crush716]

https://twitter.com/i/web/status/1658927322638974978

Public banks have exceeded 40 percent in deposit interest.

Many banks have either limited or turned off their credit taps.

Cash advance use from credit card has been stopped

The amount of cash advance usage has been halved.

Commercial loans were completely stopped.

After May 29, the markets seem to be waiting for very difficult days.

 

[Baryshx]

Also, everyone knows that we will pay for the election economy wirh very high inflation.

The hungry, the poor and the ignorant do not know this. The rich and politicians are fine, they are already swimming in dollars and euros.