Features

Turkey is in trouble again

Turkey's currency has slipped to an eight-month low against the US dollar, after a 40% slump in the first half of last year. The economy shrank by 3% in the fourth quarter of 2018 and inflation has reached almost 20%.

Emerging-market investors have turned their attention to Turkey again. The Turkish lira has slipped to an eight-month low against the US dollar; this follows a slump of 40% in the first eight months of last year.

President Recep Tayyip Erdogan, Turkey's increasingly authoritarian leader, has often accused foreign powers of orchestrating the currency crisis. Turkey has charged JPMorgan with "causing volatility" that prompted a run on the Turkish lira, says Carlotta Gall in The New York Times.

In truth, the sell-off shows that factors driving last year's currency crisis, such as geopolitical tensions and domestic policy, haven'tgone away, says Jason Tuvey on Capital Economics.

Erdogan has picked another fight with the US, criticising Donald Trump's intention to recognise the Golan Heights. Meanwhile, his habit of putting pressure on the central bank to keep interest rates low is a recurrent headache.

The Turkish economy shrank by 3% in the fourth quarter of 2018 and inflation has reached almost 20%. It now seems the pace of economic contraction is "starting to ease", says The Economist. But a cyclical recovery won't resolve longer-term issues such as cronyism and mismanagement. The worry is that "populism, not liberalism, represents Turkey's factory settings, to which it has returned" after a few years in which it appeared to be embarking on the path ofpro-market reform.

Recommended

Emerging markets fall behind their developed-world counterparts
Emerging markets

Emerging markets fall behind their developed-world counterparts

While developed-world markets look forward to a recovery, emerging market stocks have tumbled as foreign investors pull out cash.
16 Apr 2021
Four of the best investment trusts for investing in emerging markets
Investment trusts

Four of the best investment trusts for investing in emerging markets

Investors need to tread very carefully in this risky sector. Here are the best ways to approach it
22 Mar 2021
Storm brews in emerging markets as investors pull cash out
Emerging markets

Storm brews in emerging markets as investors pull cash out

Foreign investors have begun to pull cash out of emerging markets as they begin to look less attractive when compared to the rising return from holdin…
12 Mar 2021
I wish I knew what an emerging market was, but I’m too embarrassed to ask
Too embarrassed to ask

I wish I knew what an emerging market was, but I’m too embarrassed to ask

This week's “too embarrassed to ask” explains what emerging markets are, and why you might want to invest in them.
9 Sep 2020

Most Popular

“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?
Bitcoin

“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?

Dogecoin – a cryptocurrency created as a joke – has risen by more than 9,000% this year alone. Saloni Sardana looks at how something that began as an …
19 Apr 2021
Lab-grown meat: how “moo’s law” will drive innovation
Soft commodities

Lab-grown meat: how “moo’s law” will drive innovation

Jim Mellon and Anthony Chow, co-founders of Aim-listed Agronomics, explain why they believe that “cellular agriculture” will benefit from massive long…
16 Apr 2021
The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021