Public finances

• As Powell said, the budget deficit isn’t the urgent problem in the U.S., even globally. Still, in countries with an already high deficit the impact will be huge, and come swiftly.

• Industrial production showcases a very deep shock. Calendar-adjusted, the decline is 2 percent in March. This is only the beginning. The recession may eat into 2020 in toto.

• There can be no strong revenue generation because imports are expected to fall given new taxes, and exports are weak. Domestic demand can’t recover fully whatever one does.

• If FX holdings go up, interest rates cannot fall much. If inflation expectations surge, interest rates need to be higher. If reserves are weak, real rates have to be higher.

• If one tries to defend the currency, maintain low TRY rates, and monetize; if one can’t collect enough tax revenue, and can’t rely on tourism, currency stability is elusive at best.

• Either the inflation wave that awaits us will be substantive, or prices will be contained because growth won’t come back easily. The middle ground is hefty government borrowing.

• The message is non-interest expenditures continue to rise. Since the allocation of budget expenditures is inelastic, they may follow the current path in the coming months.

• Either non-tax revenues should increase somehow, or there is a possibility that fiscal deficits may not easily revert back to yesteryears’ average in they years to come.