Turkey’s failed military coup last month rocked the foundations of its political system, yet in some ways the country has emerged stronger and more resilient.
In addition, that’s precisely what Turkey needs to deal with one of its biggest and oldest challenges: the Kurdish minority and the PKK separatists who took up arms against the Turkish military 32 years ago this week.
The failed July 15 coup in Turkey has prompted a tsunami of responses by the government that is likely to have a lasting impact on all aspects of politics and society, including the economy.
After last Friday’s failed coup attempt in Turkey, a measure of calm has returned to global markets. We did not think Turkish developments have wide-reaching implications for EM assets, but we do remain very negative on Turkish assets in the wake of the coup and ongoing political uncertainty.
Political Outlook
In the vitriolic debate over the UK’s membership of the EU, Turkey’s potential membership became one of the talking points. Prime Minister Cameron, who has advocated Turkey’s eventual membership, is likely correct in his assessment that this that if it does take place, it won’t be anytime soon.
It has been long recognized by the investment community that power in Turkey was concentrated in Erdogan’s hands. He enjoys incredible power in the ceremonial presidential post and brooks no rivals.
Common among authoritarian leaders is that they habitually turn on handpicked successors, as they grow fearful of competitors. This is precisely what has played out in Turkey in recent days and now has come to a head.
It might not be on investors’ calendars, but European officials will take steps toward addressing two issues tomorrow. First, the EC will make a preliminary recommendation of visa-free travel in the Schengen area for Turkish passport holders. Second, the ECB governing council will hold a non-monetary policy meeting. It is expected to discuss the future of the 500-euro note.
According to government data, the economy grew 4.0 percent in 2015, the fastest pace since 2014, surpassing analyst expectations, according to AFP. The good news may prompt the central bank to raise rates unless Russian sanctions hamper economic progress. Prime Minister Ahmet Davutoglu promises such measures as pension reform, increasing the minimum wage and fostering a suitable business climate.
The AKP won over 300 seats in parliament, allowing the party to regain single rule that was lost over the summer. However, the majority parliament is not enough for President Tayyip Erdogan to change the country’s constitution and amass more executive power. In response to the victory, the nation’s stock index gained 5.0 percent, and the Turkish lira jumped 3.6 percent.
Turkish President Recep Tayyip ErdoÄŸan received a rapturous reception in his early days in power, but a series of political errors has sullied his public image and undermined his power.
Since his Justice and Development Party (AKP) attained power in 2002, Recep Tayyip ErdoÄŸan has dominated Turkish politics. However, discontent about his erratic leadership is intensifying. There is a widespread perception that power has gone to his head and his political decisions are now more about aggrandizing his ego than doing the best for Turkey.
Turkish governing party, AKP, has come under fire over such economic problems as high household debt and unemployment. Despite the party’s growing unpopularity and attacks from the opposition, the AKP is set to win the government by a slight majority. The general election in Turkey takes place on June 7.
