JP Morgan recommends Turkey's Erdoğan 2 ministers

International investment bank JP Morgan commented on the results of Turkey’s elections held on June 24, and suggested current free-market-supporting ministers be in the upcoming cabinet. The bank also pointed out three issues about Turkey’s economy after the elections
Tuesday, 26 June 2018 22:51

International investment bank JP Morgan released a press statement on the results of Turkey’s elections held on June 24, and recommended two free-market-supporter ministers for the cabinet to be formed in two weeks, while also pointing out three significant issues on Turkey’s economy.

Stating that they expected the political tension that has accumulated until the elections to diminish in a couple of months, the statement of JP Morgan underlined that the market is focused on the cabinet to be formed in two weeks. In the statement, two free-market-supporter ministers, Mehmet Şimşek and Naci Ağbal, were said to be particularly welcome in the new cabinet by the market, but it said that new people could cause “uncertainties”.

JP Morgan also pointed out three issues that may form the markets in the period after the elections.

First, said JP Morgan, investors are concerned by the possible recursion of the political pressures on the Central Bank of Turkey (TCMB), but that their scenario did not involve steps towards a loosening of monetary policies that may erode credibility, either.

JP Morgan said that they expected the TCMB to continue with the current monetary policy until early 2019 when the inflation will start to decrease, but that they also cannot ignore the possibility of an early risk of loosening.

Second, JP Morgan commented that there would be a risk of financial loosening if economic activities slowed down sharply.

Finally, JP Morgan also mentioned the issue of structural reforms. Saying that Turkish president Recep Tayyip Erdoğan has received a powerful authority for structural reforms as result of the elections, and that conditions existed for reforms, JP Morgan stated that reports on the reforms of the government prevented them from being “optimistic”.