EUR 573.55 For Business Accounts Only

BGC Partners: 2020 TURKEY EQUITY STRATEGY - "Here Comes the Sun!"

Growth: Global growth is likely to pick up in 1H20 as trade war related worries ease and accommodative monetary policy by central banks provide the necessary support. As for Turkey, we forecast a balanced GDP growth of 3% in 2020, while a revival of investments is necessary for growth rates above.

Politics: While new political parties will be set up, the noise and distraction related to domestic politics should remain relatively low in 2020. That said, Turkey’s assertive stance on international issues may raise tension with its traditional allies. Issues related to Libya, Syria, and Eastern Mediterranean will be closely watched in 2020.

Budget: Budget balances have been deteriorating despite Government’s cost saving measures, due to weak economic activity and elections, as headline deficit was contained by chunky dividends received from the CBT. Some recovery in economic activity, along with measures to increase tax collection, should help contain the headline budget deficit to GDP ratio at just below 3% for both 2019 and 2020.

Inflation: Improving demand conditions following sizeable rate cuts should exert some upward pressure on inflation. We expect inflation to remain sticky at low-teens for most of 2020 before finishing the year at just above the 10% mark.