Expectations for the Medium Term Program rise each day
We can say one of the factors that prevent an excessive deterioration of the markets is this expectation. Since the day the Treasury and Finance Minister Berat Albayrak assumed command of the economy, he has pursued an expectation management strategy in line with his short term targets.
Before every meeting, Albayrak says their aim is “to take the views of all shareholders while preparing the OVP and come up with a joint document based on them.”
When viewed from another perspective, this means the message given to those who attend the meetings and to the public is to “wait until the OVP is out.”
Based on the people and circles who attend these meetings, there is a perception being created that “there is someone in the driver’s seat of the economy who takes our views and demands seriously.” Let’s not forget this is a successful method in terms of the pursued expectation management strategy.
Markets have been watching these meetings closely and trying to take a position by looking at the leaked information from these meetings. We say “leaked information” because these are actually meetings closed to the public, which take place behind closed doors but afterward, impressions are reflected and the minister himself posts short messages he deems suitable via his Twitter account.
In short, we are face to face with an expectation management strategy that has been pre-planned. It could be said this method has proven to be successful so far. This way, there is an expectation being created along the lines of “some new things will be done this time,” while time is being bought to prevent negative developments in a pessimistic climate.
This could also be the reason behind why the market reactions remained rather mild when the Central Bank did not raise interest rates.
It is also clear the expectation management strategy is more efficient compared to before, not only because the Treasury and finance minister has all the powers in his hands, which had previously been dispersed, but also because the minister is much closer to President Recep Tayyip Erdoğan compared to former ministers.
There is no doubt time has been bought. But here is the gist of the story; if by the end of the time they have gained, the expectations created are not met, then the disappointment of different circles, as well as that of the markets, will be much bigger.
No matter how much time has been gained, it could be said this time will be up by the end of September. Minister Albayrak says the economic policy will gain clarity with the announcement of the OVP. He himself has said the plan will be finalized by the end of September at the latest. He has also said the name of the OVP will be changed and a more suitable name will be found. This means expectations will be one step higher with its new name.