Bluebay Asset Management’s senior analyst, Timothy Ash stated “Perhaps ‘shock therapy’ is the only solution for the Turkish economy.”
On his social media account, Ash, who shares posts about Turkey, touched upon economic policies ranging from regulations, current account deficit, inflation, to elections, and used the expression “Turkey is probably in the worst state I have seen since the 2000-01 crisis.”
“Perhaps ‘shock therapy’ is the only solution.”
Ash made the following assessments:
“Turkey is in its worst economic condition, probably since the 00/01 crisis. Banks are not lending due to absurd regulatory environment and significant negative interest rate margins.
Companies lack working capital to produce.
Exports are in a difficult situation due to weak demand in Europe.
The current account deficit increased due to the previously applied fixing of exchange rates (before the elections), weak exports, and competitiveness problems arising from minimum wage increases.
Previous terrible economic policies should be relaxed by Şimşek (Mehmet Şimşek, the Minister of Treasury and Finance) and Erkan (Gaye Erkan, the Central Bank Governor), but it is uncertain which policy will be lifted before the entire house collapses, like in the Jenga game.”
We hope that a credible and trustworthy team, as well as Gulf money (in economic policies), will provide time for a gradual normalization. However, perhaps “shock therapy” is the only solution.