Turkey: Turkish lira on the ropes – Huge trade balance deficit

Turkey: Turkish lira on the ropes – Huge trade balance deficit

US dollar breaks the 7-lira psychological barrier.

The efforts of the Central Bank of Turkey did not pay off, as the Turkish lira continues to depreciate and the dollar broke, as a result, the psychological barrier of 7 Turkish lira. Yesterday’s 1% devaluation was the result of a bombardment with bad news regarding the negative performance of the Turkish economy. The euro/Turkish lira exchange rate reached 7.7. The devaluation since the beginning of March, when the first coronavirus outbreaks were reported, has exceeded 9%.

In March 2020, Turkey’s trade deficit increased by 181% compared to March 2019. The deficit amounted to $ 1.9 billion back then, while today it has reached $ 5.3 billion.

In the first quarter of 2020, trade deficit increased by 117%, from $ 5.9 billion to $ 12.9 billion. The April data will be announced at the end of May.

The tourism industry is also expected to suffer losses due to the coronavirus pandemic. In March 2020, tourism revenues decreased by 47% compared to March 2019. In the first quarter of 2020, tourism revenues dropped by 11.4% compared to the same period in 2019 and amounted to 4.1 billion dollars.

This large gap in foreign exchange earnings creates demand for foreign currency, resulting in the devaluation of the Turkish Central Bank’s lira, the foreign exchange reserves of which have fallen to $ 52 billion. Since the beginning of the year, the Central Bank has injected 27 billion in the market with a corresponding reduction from its reserves.

We sat down with acclaimed financial analyst Mustafa Sönmez to talk about the Turkish economy. He said unemployment also constituted a major problem. “There are 4-5 million people who lost their jobs recently. Add 1.5 million from the age-related restrictions, and another 1.5 million from the stores that closed down by order of the Ministry of Interior; and there were 4.5 million already unemployed. We are talking about 13-14 million unemployed and an unemployment rate of 30%”.

He explains the country will have to repay $ 170 billion in debt over the next 12 months. In the past it could find new loans, there were investors who put money in the stock market or in bonds. But after the pandemic, foreigners leave countries like Turkey or do not choose them as their destinations. It is becoming increasingly difficult to find funding. And Turkey’s risk is high, which leads to increased borrowing costs.

Sönmez notes that Ankara is rejecting the IMF scenario not only for reasons of prestige, but also because, as he explains, “the IMF solution is not easy. In the case of funding, the IMF requires close monitoring of Turkey. To conduct assessments on non-transparent data, perform checks and intervene. The Erdogan government does not want to establish such a relationship with the IMF. There is pressure in the choice of moves”. He goes on to underline that, “unfortunately, Turkey will face very high unemployment rates in 2020 alongside a sharp recession, declining incomes, impoverishment and social unrest”.

“Military Coup” in the Turkish political debate!!!

An intense political confrontation has erupted between the Turkish government and the main opposition. Statements by Republican People’s Party (CHP) officials have angered Recep Tayyip Erdogan’s associates, who accuse the opposition of hinting a military coup.

The remarks were made by Republican People’s Party spokesman Özgür Özel, who said: “The end of the palace regime is close. This end of an era will also put a stop to the appointments which make Kemal Ataturk turn in his grave. Fear is of no use; your end has come, the voting that brought in now will now throw you out”.

However, the statements of Canan Kaftancıoğlu, chairwoman of the CHP’s organizing committee in Istanbul, were fiercer. “The government is not on a good path as it moves forward based on one man’s opinions. This, in the next period, either through early elections or in another way, will result to a change in the regime and the system. The people have woken up and they know who is the one working against their interests”, she said.

Turkish Communications Officer Fahrettin Altun was quick to respond that “those who have the audacity to attack and threaten the legitimacy of our government and our president, because they find the success of the presidential system hard to swallow, should know that Recep Tayyip Erdogan and his companions do not bow their heads to any threat”.

Ruling party spokesman Omer Celik stated that “calling the legitimately elected government a regime is the first step in their savage mentality aimed at paralyzing democracy, as was the case in the ‘Plati Island’. Throughout their history, they have worked as an organization to paralyze democracy”, he stressed.

Turkish Prime Minister Adnan Mederes, who was overthrown in a military coup in 1960, was hanged in Plati.

Planning Turkey’s return to normality after coronavirus

According to Hurriyet newspaper, as the number of deaths and outbreaks is steadily on decline, the government is preparing to draw up a plan to gradually return the country to normalcy.

The first phase starts in May when barbershops, hairdressers, small shopping malls might open, as always following the protective measures in force today. The lockdown on the weekends will continue until the end of May.

The second phase will start after the Bayrami of Ramadan, and will last from May 27th to August 31st. Long-distance travel will be allowed, while some international flights will commence again and all companies will resume business; yet, schools will remain closed.

The use of a mask and the compliance with the social distancing and personal hygiene rules will be mandatory in the second phase as well.

The third phase begins on September 1, when the State will become fully operational, while the schools will also reopen. /ibna