19/04/2024
Expert Talk
The Upside of Geopolitical Uncertainty
Turkey shakes summer thin markets
Friday 17 August 2018
Expert Talk
Turkey shakes summer thin markets
Turkish Lira depreciation in August is the consequence of an unsustainable growth regime financed by rising private debt (mainly external debt) and combined with a current-account deficit that had become excessively financed by short-term capital flows. Actually, the economy is experiencing a classical balance of payment crisis. Even before the recent crisis, Turkey was the most vulnerable country among main Emerging Markets (EM). Not a single measure can reassure investors. A mix of monetary policy action, economic adjustments and temporary recourse to some forms of capital control can help mitigating the crisis, with some de-escalation on the geopolitical front between the US and Turkey, but in the short term volatility will remain high.
