Turkiye could attract $45 billion to $50 billion in inflows within 12 months after May elections, Citi economists estimate, assuming monetary policy normalization and improvement in the macroeconomic outlook.
“Based on our empirical findings and the strong market reaction to policy actions during former governor Naci Agbal’s tenure at the central bank, we consider an illustrative scenario in which credit default swap spreads decline by 250 basis points,”economists Ilker Domac and Gultekin Isiklar wrote in a note published Tuesday.
Following a possible decline in the lira driven by the relaxation of regulatory measures, improvement in the risk premium could lead to an appreciation of about 12% over one year, the economists said.
“Uncertainty surrounding the composition of the economic team post the elections and management of the economy in the interim period if there is any need for a second ballot are among the key risk factors,” they said.
