After Turkey’s referendum, foreigners have appeared willing to put money back into Turkey, Timothy Ash, a senior emerging market strategist at London-based BlueBay Asset Management, said on Thursday. Ash said in a client note that a potential recovery in the country was proving intriguing to investors. As Anadolu Agency writes in an article "Foreign investors inject money back into Turkey: expert", Ash noted that "the PMI [Purchasing Managers Index,+53.5 in May, from 51.4 the month earlier] is I think also reflected in other confidence and higher frequency economic indicators which suggest that the economic outlook is looking up."
"Perhaps this reflects optimism that with the referendum out of the way, domestic politics will stabilise and the Justice and Development [AK] Party will return to a pro-business agenda, plus also more orthodox policies from the Turkish Central Bank, an improvement in the domestic security situation (at least fewer higher profile attacks)," Ash added. Ash said that the increase in tourism in April (18 percent year-on-year) was also a major positive surprise, even though the base was low.
"But last year tourism receipts came in at $16 billion, down from the 2014 peak of $25 billion. Any upturn on last year’s outturn would be positive result, and could add a couple of billion bucks to the current account position. The ending of Russian sanctions, plus improved security domestically seems to be helping on the tourism front," he explained.
Ash emphasized that since the April 16 referendum, there has been a clear sense that President Recep Tayyip Erdogan wanted to get back to business, and return the agenda to the economy, which, Ash insists, was the foundation of AK Party success at least in the first decade of its rule.
"It’s about the economy stupid and for the AK Party it was about creating jobs, investment and growth. I think this is now seen as more important as the referendum showed that the party is likely to face a tightly fought, but now much more important 2019 election," Ash said. "So in this respect we have seen more moderate tones used by Erdogan, Yildirim and the cabinet to the business community, and foreign road trips to talk up the business agenda. I think giving the Turkish Central Bank a little more rope to run a more hawkish and orthodox monetary policy is part of this, as a stable/strong currency is now seen as important to broader confidence in the economy."
Ash also mentioned the noticeable improvement in the domestic security situation in Turkey, with a marked downturn in terror attacks. Additionally, the improvement in relations with Russia offers the prospect of more trade, tourism and investment from the country, he added.
