Economist explains why Turkey does not have an early election

A prominent British economist/strategist has claimed that President Erdogan is waiting for dollars and survey results for an early election. Timothy Ash, at Bluebay Asset Management, headquartered in London, explained that he did not think the AKP could keep the TL stable until June 2023 with its current economic policies.

He suggested that he thought President Recep Tayyip Erdogan would therefore decide on an early election, if he caught a stable period in TL is stable and saw an improvement in the polls. He went on to say if these conditions came true, Erdogan would lead Turkey to an election in the fall.

The economist also said, “I do not think that the current economic policy will be able to keep the Lira stable until June 2023. That’s why I think it’s very possible that Erdogan will go to the elections early. If the Lira remains stable for a period and sees some improvement in the polls, September-October may give it a window in which it can go to early elections.

The markets want a peaceful election

“I think the markets will focus on the polls and the messages: “Is this going to be a contested election? Will the campaign period be calm? Will Erdogan hand over power easily if he loses?” etc. The markets want a peaceful and democratic election. At the same time, markets and people want good economic policies to be implemented, regardless of whoever wins. As I said; the current economic policy environment; negative real interest rates are very damaging. This is one of the main causes of high inflation. The markets certainly want to see a change in monetary policy.”

Turkey may suffer in case of a war in Ukraine

The economist went on to say, “If we see a war in Ukraine, Turkey will have to change its policy. Turkey will suffer as it will lose revenue from higher energy prices and tourism. I think the current goal is to save time until the tourist season starts in May-June. They hope that this will alleviate the current account deficit. However, if we see a conflict in Ukraine in the next month, Russian and Ukrainian tourists will most likely not come to Turkey. This is a blow to the current account balance. We see a lot of pressure on the exchange rate. I think that in this case, the Central Bank will have to make a difficult decision and raise the policy rate.”