A tale of 2 Turkish economic futures
Posted by meb at October 31st, 2008
Mixed messages on the future of the global economy proliferate as leaders make moves to bring optimism to markets worldwide and international newspapers shred Turkey’s stance amid the turmoil. The national currency hovers around 1.50 per US dollar even as the Istanbul bourse takes a hefty 7.4 percent jump.
An interest rate cut by the U.S. Federal Reserve and the International Monetary Fund approval of an emergency loan program to emerging markets bring optimism to the global economy again, as stock markets worldwide, including Turkey, rally. But articles in three respected newspapers cast a shadow over how Turkey will cope with its economic problems.
Optimistic messages on the Turkish and world economies dominate the first day of the World Economic Forum on Europe and Central Asia 2008 in Istanbul, and Klaus Schwab, chairman of the WEF, says crises are opportunities at the same time and the world should “grab this opportunity.”
The Istanbul Stock Exchange acts as if it has heard the call, rising 7.4 percent to 26,733 points. But the currency outlook remains unstable, as the U.S. dollar was trading at around YTL 1.54 yesterday evening, while the euro traded at around YTL 1.98. But Suzan Sabancı Dinçer, chairwoman of Akbank, says a level of the YTL between 1.50 and 1.55 per dollar is very healthy for the economy.
Currency woes also create fertile ground for disaster scenarios, as three prominent international newspapers say the Turkish economy is “on a dangerous path” and may need foreign help. Quoting a Deutsche Bank report, The Washington Post claims Turkey “may be in need of $90 billion” in funding, while Financial Times says the help may not come from the IMF. French daily Le Monde adds insult to injury, claiming the country is “running toward disaster” by not requesting IMF help.
The IMF has doubled borrowing limits for emerging-market countries, a move which follows interest rate cuts in the U.S., China, Taiwan and Hong Kong.
Mixed messages on the Turkish economy were coupled with pessimistic economic data from the United States, as the world’s biggest economy suffered its biggest decline since 2001 in the third quarter. The U.S. gross domestic product contracted at a 0.3 percent pace from July to September, according to official data.
source: Turkish Daily News
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