The FT today publishes a special report, Investing in Turkey, on the challenges facing the country’s government and private sector as it struggles to gain competitiveness and deal with one of the most daunting current account deficits in the developing world. At 13.00 GMT, Daniel Dombey, Turkey correspondent, and freelance writer Andrew Finkel will host a live discussion on Twitter on the country’s economic and political future. Here, Dombey outlines the difficulties Turkey faces in delivering the investment needed for growth. Continue reading »
Credit card debt is the latest frontline in Turkey’s bid to make its economy less vulnerable. For several years, the country’s technocrats have fretted about rates of loan growth running at an average of about 30 per cent a year.
So the country’s banking watchdog took a dramatic step last week to get the phenomenon under control, with new rules limiting credit card borrowing limits. Continue reading »
This week, Turkey reported better than expected growth figures. But Thursday, it came out with worse than expected current account figures – a $5.8bn deficit for July, compared with an expected $5.5bn or so.
So the phenomenon widely seen as the Turkish economy’s biggest Achilles heel – the deficit that makes the country deeply reliant on foreign funds – is still stubbornly large. This at a time when foreign resources are expected to be in much less bountiful supply, due, among other factors, to the prospect of US Federal Reserve tapering its monthly bond buying programme. Continue reading »
In these days of increased scrutiny of emerging markets, it is always important to keep a close eye on the most telling numbers about an individual economy.
One such figure came this week, when Turkey reported a higher than expected rate of growth for the second quarter – 4.4 per cent, compared with expectations of 3.5 per cent or so. There were other stories tucked away in the data – notably the importance of household consumption, state spending and inventory building in boosting demand, even as private sector investment declined. But overall the news was certainly a fillip to the government in a difficult economic environment. Continue reading »
By Anthony Skinner of Maplecroft
Previously respected for his political vision and acute instincts, Turkish Prime Minister Recep Tayyip Erdogan may increasingly become a liability for his ruling Islamist Justice and Development Party (AKP). The premier’s campaign to quash dissent in civil society and the business community, his righteous criticism of EU and fellow NATO allies, and impressive array of conspiracy theories are a big concern. Continue reading »
Turkish house prices are on a seemingly endless rise. The latest figure, for May 2013, shows an increase of 12.2 per cent annually.
Turkey is used to double digit house price growth rates. Since the Central Bank of Turkey started producing its house price index in 2010, growth rates have almost always been in double digits, and rising. But economic growth has slowed from 8 per cent plus to around 2 per cent. Chart of the week takes a look at what is driving the market. Continue reading »
Some respite for the Turkish lira on Monday after a surprise statement by Erdem Basci, governor of the central bank, saying the bank would not allow global monetary and fiscal policy uncertainty to have an impact on “price stability and financial stability in Turkey”.
Has Basci joined the “interest rate lobby” so despised by prime minister Recep Tayyip Erdogan? Continue reading »
It looks like a case of whiplash Thursday for Turkey.
Ankara is looking to stave off a decline in the lira and avoid a rise in interest rates – and all that entails for growth prospects and the prime minister’s denunciations of a shadowy interest rate lobby. Developments this week have made things even harder. Continue reading »
The rally in Turkish stocks came to a halt in May. Erik Nielsen, chief economist at UniCredit, explains why to Ferdinando Giugliano of the FT and looks at the dilemma Istanbul faces of controlling its current account deficit while boosting growth.
With Brazil taking over the running in emerging market protests, the television cameras have turned their focus away from Turkey. But investors have not: Istanbul remains firmly in their sights – as does the possibility of further markets carnage (whether or not the demonstrators return to the streets).
On Friday, the markets were calm as bankers weighed the impact of the central bank’s latest attempt to shore up the lira. But nobody’s fooled – in a world of higher borrowing costs, Turkey is vulnerable. Continue reading »
A few words from Prime Minister Recep Tayyip Erdogan was all it took to send the Turkish stock market plunging on Thursday afternoon.
Prices were steady until Erdogan threw down the gauntlet to anti-government protestors, saying that the law must be upheld, that a minority could not dominate – and that the controversial planned development in an Istanbul park, which prompted the unrest, would go ahead. Shares plummeted 8 per cent before recovering to finish ‘only’ 4.7 per cent down [updated]. That took the total fall since the demonstrations began to around 11 per cent. Continue reading »
By Atilla Yesilada of GlobalSource
The mass protests over the decision of the Istanbul municipality to fell trees at Gezi Park in the city sparked commentary that a “Turkish Spring” is underway.
No, this is not a Turkish Spring. But it is no less unique and potentially lethal to the economy. The ruling Islamist AKP needs to understand that the half of the population that has not voted for the party is crying out for attention. If these people’s demands are not met, financial markets could experience an upheaval that would destroy Turkish economic stability, creating a vicious cycle that could rapidly erode the gains of the last 10 years. Continue reading »
Source: Borsa Istanbul
The Turkish stock market bounced back 4.4 per cent on Tuesday morning after Monday’s 10.5 per cent collapse, the lira was steady against the dollar and the bond market strengthened, with the yield on two-year lira bonds falling 46 basis points to 6.32 per cent, after Monday’s surge.
But with so much uncertainty around, it’s far too early to talk about stabilisation. There were sporadic clashes overnight between protestors and riot police. Trade union leaders declared a two-day strike starting on Tuesday, which, if nothing else, gives plenty more people the opportunity to participate in the demonstrations. Continue reading »
By Emre Deliveli
Everyone has been talking about the politics of the protests in Turkey, which started as resistance to the demolition of Gezi Park in central Istanbul and quickly turned, thanks to police brutality, into nationwide protests against the country’s authoritarian Prime Minister Recep Tayyip Erdoğan. But not much has been written about the economic implications of the protests.
From an economic point of view, the demonstrations caught the Turkish economy at a really bad time. Continue reading »
A dramatic plunge in late trading extended the losses in Turkish equities on Monday to a full 10.5 per cent – the biggest drop in more than five years – as investors worried about the financial and economic impact of the country’s political turmoil. Yields on government debt soared, with the benchmark two-year lira bond trading at 6.78 per cent, up from 6.07 per cent on Friday.
Meanwhile, the currency markets stabilised a bit, almost certainly thanks to some intervention by the central bank. The Turkish lira, down around 2 per cent at the opening against the US dollar, later strengthened to trade at 0.4 per cent down at TL1.88. Continue reading »