Thursday, June 25, 2009

W a la Turca

Nope, I am not talking about the Turkish version of the honorable former US President, although I do find him and PM Erdogan similar in the sense that both are highly entertaining:)... I am talking about the Turkish recovery in terms of the alphabet, as it has been done for the US.

While the latest rise in the real sector indices was interpreted by many that the recovery is under way, there are also discouraging signs suggesting that we may be in the first half of a W and further falls might lie ahead.

The overall index is almost in positive territory, and this surely can not be a bad omen. But the devil is in the details, and one detail we get from the latest figures is a decoupling between the present and the near future. Another is that the destocking, supported by the special consumption taxes, seems to have come to an end, and stocks could be building up again. Despite the latest encouraging signs on the consumption front (such as the consumer sentiment indices, which I don't trust that much anyway), consumption seems to have kept behind production as of late. Last but definitely not the least, especially in terms of the country's growth prospects, investment prospects continue to look dire.

All in all, all this seems to indicate that after the spring-summer recovery could be short-lived, with the economy seeing another dive after the cyclical factors die down towards the end of the summer. Of course, an IMF deal could provide a boost, or the CBT rate cuts could start working their way into the economy, but these are anybody's guess at this time.

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