Turkey Vulnerable to Economic Headwinds

But the past 18 months have been bumpy for Turkey, and its backers. There have been vociferous protests against Erdogan, a deadly mining disaster, and the economy has slowed sharply.

Just last week, the government cut its forecast for growth to just 3.3% this year, and 4% in 2015. The Turkish lira has fallen 12% against the dollar over the past 12 months.

Recent volatility in financial markets has exposed Turkey’s vulnerabilities.

Finance Minister Mehmet Simsek admits there’s been a stream of bad news for emerging markets but is cautiously optimistic that Turkey won’t be starved of the capital it needs.
“I realize there are huge challenges out there, but I don’t think it will be as bad as in the past partly because fundamentals are better in emerging markets but partly because we are not going to see synchronized global monetary tightening,” he told CNN’s emerging markets editor John Defterios.

Beyond market turbulence, the NATO member is also nervously watching the advance of ISIS fighters near its border with Syria and across Iraq.

Turkey has already spent $4.5 billion taking care of 1.6 million refugees, and the numbers are rising.
And it’s suffered a loss of trade too.

via CNN

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza