Turkey’s capital flows could increase post-election
Thursday, April 13, 2023
Significance
Turkey, which has underlying attractions for investors and lenders, needs foreign capital inflows for stability and growth. A change of government in May could accelerate net foreign capital inflows which have been subdued in the past few years, in part due to the policies of President Recep Tayyip Erdogan.
Impacts
- The lira could be volatile after the election, depreciating sharply but also appreciating at times.
- A share price boom is unlikely after last year’s strong gains; domestic investors may prefer bonds and bank accounts as interest rates rise.
- Capital flows will remain sensitive to any signs of political instability or imprudent policy.
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