Türkiye a potential big story for next year: JPMorgan

Türkiye's fiscal policies could pay off with the continued return of foreign investors in 2024, JPMorgan Managing Director Stefan Weiler has told Reuters.

After the strong election victory in May, President Recep Tayyip Erdogan's monetary policies began luring back international capital.

"From our side, we see Türkiye as a potential big story for next year," Weiler, the head of JPMorgan's Central & Eastern Europe, Middle East and Africa (CEEMEA) debt capital markets, told Reuters.

The central bank under Hafize Gaye Erkan, who was appointed as governor in June, began tightening interest rates straight away.

The key interest rate, which stood at 8.5% pre-election, is now 40%.

'The tide has turned'

In 2024, the government is expected to issue around $10 billion in international bonds, matching this year's number. Weiler said he expected a "significant pickup" in borrowing from corporates and banks.

"As long as market conditions globally are constructive, Türkiye should see the busiest year ever in terms of international capital markets issuance activity," Weiler said.

"Foreign capital already started flowing back, and it seems like the tide has turned for Türkiye," he added.

"I feel that the upcoming local elections will further emphasise Türkiye's direction of travel," he said, referring to the local elections on March 31.

More widely, JPMorgan expects a pickup in global emerging market hard-currency debt issuance next year. Still, Weiler said that the total level would be far from a historic peak with a drop off in issuance from China.

New fiscal era for Türkiye

Following Mehmet Simsek's appointment as the Minister of Treasury and Finance, significant transformations have unfolded in Türkiye's economic landscape. Simsek emphasised transparency, consistency, and predictability as main principles of the Turkish economic policy.

Since the May elections, structural reforms to bolster the central bank's fight against inflation have taken centre stage in the government's agenda.

Simsek identified lowering inflation, fiscal discipline, and reforms as the key pillars of Türkiye's medium-term economy programme (MTP), spanning 2024-2026.