Turkey Country Report Apr22 - April, 2022

April 8, 2022

Ukraine War: Ukraine was still resisting Russia's invasion as of April 7, while the Russians had retreatred from around Kyiv. See the live map here.

The media's attention span for the war is contracting, just as the slaughter is intensifying. The Russians have surrounded cities and are laying them to waste. The mood is that everyone wants to end this unnecessary massacre, but there is no deal emerging on the horizon as yet.

On the contrary, there's lately been talk of chemical weapons. Talk of chemical weapons opens the way to provocations. In Syria, chemical weapons were used as soon as Barack Obama had said that chemical weapons were a red line for the US. The red line was breached, but Obama did not fulfil his promise to act.

Chemical weapons or not, risks and provocateurs will abound until the violence ends.

Whatever the result of the war, Vladimir Vladimirovich Putin, has already proven himself a loser. Prior to February 24, he was among the biggest energy speculators in the world with more than $600bn of cash and cash-equivalent in his pocket.

His hobbies included confounding despised representatives of so-called democracies, intervening in US elections and supporting the extreme-right in Europe. He's now a stony-broke loser struggling to think of a single reason why the Russian oligarchy should not get rid of him.

Brent oil and commodity prices, in general, are still on a wild path. So far, the price fluctuations have been ascribed to speculative trading on the financial markets.

Despite the fluctuations, average commodity prices have boomed. The FAO food price index broke record in February with 141, up 24% y/y.

As of April 6, Brent was up 71% y/y to $103 while the Bloomberg Commodity Index (BCOM) was higher by 52% y/y at 125. The USD/Turkish lira (TRY) pair was up 82% y/y to 14.7.

Since March 4, the Erdogan regime has been aiming to keep the USD/TRY pair below the 15-level.

Turkey’s 5-year credit default swaps (CDS), meanwhile, hover in the 500s while the yield on the Turkish government’s 10-year eurobonds is in the 8%s.

The tension in the sunflower oil trade also continues. Ukraine and Russia have a combined 80% share of global sunflower oil exports. The spring sowing season in Ukraine is under scrutiny amid the strife.

Since February 24, when the Putin regime launched its full-blown invasion of Ukraine, Black Sea trade (as regards Ukraine totally, Russia mostly, Moldova-Romania-Bulgaria partially) has stopped.

There are those in the Erdogan regime who have benefited from the Syrian War via shadow and illegal trading. The Turkish economy also enjoyed crumbs dropping from the table in terms of the “trade” activities in question in the initial years of the war.


Russian oligarchs are welcome to continue doing business in Turkey, Turkish foreign minister Mevlut Cavusoglu said. Ukrainians and Russians fleeing to Turkey boost real estate demand.

It is too early to form conclusions as to what the direct impacts on the Turkish economy from the Ukraine War will be, although the indirect effects seen in booming commodity prices are currently undeniable.

In Turkey, President Recep Tayyip Erdogan confirmed he is staring defeat in the face at the next presidential and parliamentary elections by messing with the election law. It is a tradition in Turkey that the governing party has a go at re-engineering the election law when it is convinced that it has lost in the next polls.

One important change in the election law is that Erdogan will (indirectly) choose the heads of the provincial electoral boards. This could be a sign that Erdogan will aim for another fait accompli.

Under normal conditions, amendments to the election law come into effect at the end of the first year following parliament's approval. However, the electoral board change will come into effect after three months. So, Erdogan keeps the option of a snap poll in his hand.

Other changes voted through do not make much sense. For instance, the ruling coalition has attempted election engineering based on the results of previous elections. There is a method for allocating seats in parliament known as the D'Hondt method, which punishes smaller parties in favour of bigger parties.

Now the D’Hondt method will not be applied to the party blocs but directly to the parties. The regime hopes to benefit from it (it seems it has no hope of winning the presidential election but is trying to hold the line in parliament). However, the results will change at the next polls and the amendments will work in favour of the opposition. This always happens in Turkey. When a governing party changes the election law, the amendments end up working against it.

At the end of the day, Erdogan has three options. He can delay the elections (a war, perhaps even the ongoing conflict in Ukraine, is the legal option for a delay). He can go for a harder dictatorship, just as his bestie Alexander Lukashenko did in Belarus. Or, he can hand over the presidency (though losing its protection would spell big trouble for both him and his family across the globe).

Erdogan will try any chance he gets. The risk of blood on the streets remains significant.

Turkey's ruling Justice and Development Party (AKP) filed a bill with parliament to hike the corporate tax rate for the finance industry to 25%.

The Treasury sold $2bn worth of 5-year eurobonds at a coupon rate of 8.60% and a yield of 8.625%. The spread over the US Treasury paper stood at 645bp, the highest level recorded since Turkey's 2001 economic crisis.

Istanbul Mayor Ekrem Imamoglu sold $305mn of 5-year eurobonds at a coupon rate of 10.75%. He is the most ambitious politician in Turkey.

On March 10, Fitch downgraded Turkey and Russia focused beverage producer Anadolu Efes’ (AEFES) investment grade to junk. Efes and its subsidiary Coca Cola Icecek (CCOLA) have two outstanding eurobonds each. Papers were hit after Russia launched its unexpected full-on invasion campaign in Ukraine. It would be a surprise if Icecek or Efes default.
Akbank mandated lenders to launch the spring syndicated loan renewals season for local peers. The spring season in 2022 will last from April to July, with 10 banks to renew $8bn worth of loans.

Ford Otosan (FROTO) is buying Ford Romania. Koc Holding (KCHOL), Ford Motor Company (New York/F) and SK On (Seoul/034730), meanwhile, signed a memorandum of understanding (MoU) to explore opportunities to launch an electric vehicle (EV) battery production plant in Turkish capital Ankara.

Getir became Turkey’s second tech decacorn. Insider became Turkey’s sixth tech unicorn. Modanisa, Good Job Games, Fugo Games, Alictus, Vivense, Meditopia, Marti, Paycore and Ace Games are seen as upcoming Turkish unicorns.

SciPlay Corporation (Nasdaq/SCPL) acquired an 80% stake in Alictus for a consideration of $100mn in cash. Turkey’s gaming start-ups remain hot favourites on the international market.

To view this extensive report in full including details such as —

  • Macroeconomic Analysis
  • Politics Analysis
  • Industrial sectors and trade
  • FX, Financials and Capital Markets
  • And more!

For a one-off purchase click here

For an annual subscription click here

For a free sample click here

Related Reports

Turkey Country Report Aug22 - August, 2022

Economically, August will be a ‘hot’ month as per usual. The USD/TRY pair may crash again. On July 27, the Fed’s open market committee delivered another 75bp rate hike in line with ... more

Ukraine Country Report Aug22 - August, 2022

Ukraine’s economy experienced a huge negative shock from the invasion. Because the economy has already contracted so much and the government has to cover enormous military spending, the fiscal ... more

Russia Country Report Aug22 - August, 2022

Russia Inc is doing better than expected despite sanctions. International Monetary Fund Chief Economist Pierre-Olivier Gourinchas told AFP in an interview that higher energy prices are keeping Russia ... more

Dismiss