Saying that monetary policies in developed countries will support emerging markets in the coming days, particularly after the U.S. Federal Reserve in August shifted to asymmetric targeting higher average inflation, Jim O’Neill said:
“That should be particularly good for countries that are relying on foreign capital inflows like Turkey.”
“If Turkey is serious about reforms, this is a great moment for that,” he added.
President Recep Tayyip Erdoğan on Nov. 13 pointed to a new era of reforms in the economy and judiciary, saying that new steps will raise the standards for democratic rights and freedom.
O’Neill underlined that for an investor seeking high yield, a country set to undergo serious reforms is the best destination to invest in the debt markets of an emerging market.
“I hope that Turkish leadership is serious about reform. Because if it’s so, I think the markets’ reactions will be very positive,” he said.
O’Neill suggested that Turkey should boost its saving rates and domestic private investment rates to be less dependent on persistently volatile external capital flows.
Turkey can take advantage of the shift in global supply chains shift due to the coronavirus pandemic, O’Neill said, adding: “Because of its geography, Turkey is in such a great position to be a manufacturer for so many parts of the world, particularly Europe. In principle, Turkey is in an extremely strong position in that sense.”
Touching on new lockdown measures in big economies, he said a V-shaped recovery in the third quarter lost its momentum, and would likely take the shape of a more complex W instead.
The good news about vaccines in the coming days will be helpful for investment spending, he said, adding: “In 2021 we will definitely get a strong cyclical rebound.”
O’Neill stated that China will be the only G20 country posting GDP growth this year.
“And it’s the only one that you can say that with some kind of confidence at the end of 2021, it’s going to be 10% bigger than it was in 2019,” he added.
Hurriyet Daily News