Turkey Update, Explosions and GDP
Two deadly explosions near a football stadium in Istanbul late on Saturday (10 December) killed 38 and injured 166 people.

Also on Saturday, the ruling AKP submitted to parliament a draft proposal on constitutional amendments for executive presidency. The proposal allows the president to directly appoint the cabinet and give the president the power to rule by decree. The draft proposal also increases the number of parliamentary seats to 600 from 550, calls for two-term limit for the president, and sets the first presidential elections under the new set of rules for November 2019. The draft proposal was finalized after the AKP reached an agreement with the nationalist opposition party MHP. The draft needs to get at least 330 votes in the 550- seat parliament before it can go to a referendum, and a referendum must take place within 60 days of the parliamentary vote. The AKP needs the support of the MHP for the parliamentary approval, as it has 316 parliamentary seats (except the parliament’s AKPaffiliated speaker) and the MHP has 39.

Because of secret-balloting, defections from both the AKP and the MHP are possible at the time of the vote, although our baseline scenario is that the draft proposal will be approved by the parliament. The parliament will likely vote on the proposed amendments sometime in 1Q 2017 and a referendum will likely take place “at the start of summer”, according to previous comments by Prime Minister Yildirim.

Gross domestic product shrank an annual 1.8 percent in the three months starting in July, Turkey’s statistics bureau reported Monday. The median estimate in a Bloomberg survey called for an annual expansion of 0.3 percent.

Domestic consumption, which makes up nearly two-thirds of the economy, fell 3.2 percent from a year earlier, adding to evidence that the takeover attempt on July 15 damaged business activity. Government spending on wages, goods and services rose 23.8 percent, limiting the impact from a slump in investments, which fell 0.6 percent from the same period in 2015.