Concluding Statement of the IMF Staff, of the Article IV Mission


The summary of the statement speaks for itself — “…the economy now faces signs of overheating: a positive output gap, inflation well above target, and a wider current account deficit. This […] underscores the need to address vulnerabilities. To lower internal and external imbalances, staff recommends a recalibrated policy mix—further monetary tightening is warranted, as is careful management of fiscal and quasi-fiscal policies, as well as associated contingent liabilities.”

The thing is that we have long been confusing “resilience” with “liquidity” (or ultra-low global interest rates).  The latter has driven the economy till now, as corporate debt alone rose by some 30 pps of GDP since the GFC of 2008-09. We are now approaching the end of this “super-cycle”, but am not sure the implication of this is fully grasped, notably by Ankara. It’s time for “adjustment”, but politics can’t possibly afford that, with growth remaining the priority as long as it is feasible.