12 Apr 2019 3 min read

Turkey: Waiting for reforms

By Magdalena Polan

Turkish local elections on March 31 ended a long series of election campaigns. Will reforms follow?

Following March's local elections in Turkey, investors are hoping that the four-year gap before the next general elections means that the government will now focus on economic reforms.

These are badly needed. The Turkish economy is in recession and could benefit from easier monetary and fiscal policy. But scope for easing is limited by high levels of foreign currency debt, the strong impact of currency moves on inflation, and the low international reserves of the central bank.

Measures that address these constraints - and also broaden sources of growth - would speed up the recovery and insulate the economy from shifts in global risk sentiment. So while high interest rates of the central bank and a conservative fiscal stance can help stabilise Turkish assets for now, we believe that progress on reforms will ultimately be the key factor shaping market behaviour.

Magdalena Polan

Senior Economist

Magdalena is a global emerging markets economist. She joined in 2016 from Goldman Sachs; before that she worked at the IMF, focusing on indebted or crisis-stricken economies. She is an interdisciplinary thinker who believes that financial and economic events cannot be understood without seeing their political or social background. In her free time, she pursues her interests in current events, arts (including martial arts) and photography.

Magdalena Polan