A couple of months ago, when three HDP mayors were removed from office, I had predicted that this increased the chances of early elections in the fall of 2020. Looking at the economic sentiment of the house hold, it is safe to say chances for an early elections has slimmed since. Because, right now economy is the number one priority of the Turkish electorate and they are not happy.

As early as 2016 macroeconomists were cautioning Turkey over the vulnerabilities of its economy. The primary reason for concern was the rising debt in non-tradable sectors, primarily the construction and the energy sector. However, the inflation and interest rates were low and the lira stable. The vulnerabilities at the macro level was only an intellectual concern for the house hold if any at all. Our polling from March 2017 indicate that, a larger share of the population answered positively to the question “How do you think the economy will be a year from now?” in comparison to negative answers.

The concern was palpable before the June 24 general and presidential elections in 2018. Turkey needed around 200bn USD external financing in the year ahead and no credible answer was provided as to where these funds would come from. Again, this was not a concern at the house hold level. Sentiment changed, however, after the Pastor Brunson episode sent lira deprecating with high volatility, increasing inflation and interest rates followed. That is when it started to hurt the house hold finances. Following the high inflation, came 14% of unemployment which remained high since.

Our polling at Istanbul Economics Research indeed indicates that house hold economic expectation of the house hold is souring. Graph below shows one result from September 2018 and two results from October and November 2019 to the question “How do you think the economy will be a year from now?”

Although there is a marginal improvement in November, the negative sentiment has gone over 50% and remains there. These results are similar to the Consumer Confidence Index published by TURKSTAT. The CCI number for November reflect an incremental improvement but the index is well below 100. Similarly, 47.3% of participants to our September poll indicated that they will try and spend less than they do now, in the coming 6 months.

In short, at the house hold level, disgruntlement over economy continues to be the overwhelming sentiment. This fact alone renders the discussion over early elections obsolete for the time being.