TR Economy & Updates

[mulj]

I concretely talk to you about the currency fluctuations and that the economy is bad but you make me go deeper into the rabbit hole and talk about who is competitor to whom etc. You want critical and contextual approach from me but to go the end of it all we will need days of talking and hours of writing and explaining.

Do you want to talk about credit bubbles, low savings rates and over dependency on “Hot money” inflows or the construction bubble and the dozens of “Mega Projects” built in ways that more harm the economy than they help it.
Do you want to talk about the corruption and how Erdogan’s influence over independent institutions like the Judiciary or the Central Bank influence the economy and the investment climate?
Do you want to talk about the bad education system, lack of opportunities for the young and educated and the brain brain and what effects they have on the economy?
Or maybe you want to talk about the billions and billions of misused and wasted money and wasted opportunities?

I can be even more concrete and contextual and provide you with data and comparisons to other developing markets because the numbers are there but there is no point. Erdogan is great, economy is great, everything is perfect... it’s all the fault of the enemies inside and outside.

Sure why not, all pointed things could be reverse directed and justified, regarding investment climate minor issue, political relations are main one for possible lack of it. education and brain drainage are important and agree with that, could have strong impact for future if it is not adequate.
at the end of the day Turkey was one of the best economies last year, you can not twist that around by showing particular examples of negativity

 

[Zafer]

Fiscal tightening of last few months till now has been appreciable by Turkish govt and was correct move to help stave off the immediate crisis that was gathering muster.

The interest rate was jacked up from around 10% (in november 2020) to about 17% by 2020-end.

Turkish Lira likely will settle mid this year again at the 6.5 - 6.7 range it enjoyed for most of 2020....but at this new setting of much higher interest rate (which will have impact on various industries reliant on credit like housing and also for industrial expansion by heavy capital buying etc).

Turkey has a window this year to re-adjust as capacities come back online not jsut in turkey but in world markets....and thus there is likely not a huge credit pull across the board.

Turkish central bank has announced it will not drop interest rate in short term....giving further assurance to currency setting around this level.

But during this time (this year and next), at least now,

Turkish govt must do heavy-set reforms it has been putting off for the last 10 years or so, and especially the last 5 years.

Turkish govt cannot just leave the structural issues (at the 6 - 7 "Setting" of turkish lira/USD in last few years) aside and ignore it or tinker around edges....and divert attention from these serious issues.

The basic story of 2011 to now (in external sector) has been:

Currency value dropped from like 1.6 Lira/USD to 7....a drop of more than 4 times, a depreciation of around 16% a year.

Yet trade balance (exports minus imports) improved from (-68 billion USD) in 2011 to around (+21 billion USD) in 2019

Trade level (exports + imports) has been relatively stagnant at around 450 billion. This is not good, Turkey must be increasing this while trying to get more exports too, rather than just having it shift a bit within a certain total level.

In any regard it is concerning that Turkey's exchange rate over last 10 years has dropped like this, to this level.... while its trade balance actually improved (and changed from negative to positive).

i.e the current account pressure improved (and would have resulted in turkish lira gain against USD if it was only thing that happened)...thus more things are happening to reverse the natural expected consequence.

i.e there is severe systematic issue in the other half of equation of Balance of payments....i.e capital account (loans, investment flows etc...both quantity and quality esp given govt intervention/policy here).

So people must ask why has the lira dropped 4 times like this while trade balance improved in same span of years? This has to do with govt balance sheet and policies that affect the capital account.

My prescription (of structural reform w.r.t capital account) would be roughly:

A) Wasteful spending programs (especially those backed by loans and fiscal deficit) by govt must be cut as far as possible.

Tax breaks must be given to productive industries especially ones that can earn foreign exchange. New programs of this nature must not be announced for election gimmicks. The country has to be put first past political expedience.


B) Turkey must halt its debt accumulation, especially short term debt as far as possible.

It must even try to reverse this....and show it is serious about improving its credit rating back to prime from speculative (it has been stuck at speculative range a long time....too long)


C) Turkey must work hard to improve its investment climate.

Its FDI inflow per year has dropped from 16 billion in 2011 to around 8 billion in 2019. This is absolutely wrong direction given the potential and location of Turkey.

Its market cap valuation cycle used to average around 250 billion around 2010 timeframe.

Now that averages around 160 billion. Likely indicating FPI inflow problem there too (i.e what is cold vs hot flows) w.r.t external sector.

Turkey cannot put this stuff off any longer...it has lot of underlying fundamentals that are still quite solid, but it must harness those and do the tough reform now.

FDI has always been welcome but I would rather persevere and exploit our national resources and support our development on national resources than allowing foreigners to have big say on our economy. Turkey's growth potential is bigger than any nation in almost all the world but I would rather have it grow a natural growth rather than one on steroids.

 

[Nilgiri]

in simple words Turkey should accept dictate of MMF/IMF, do not know if that would be correct move for longer perspective in correlation with Turkey foreign policy ambitions. With higher employment rates those mentioned disbalances should be eased and that is were focus should be primarely directed. If Turkey achieves 10-15% unemployment rates then they will have more space and reserves for structural reforms by themselfs.

I can go into what is wrong with what IMF does and has done.....but I am just talking from common sense view here given Turkey does participate in USD system globally.

It has to be seen as equity, asset and flow pressure like any other.

You think the PRC got from A to B by not doing this stuff with their capital account? It is worth to study what they did from 1980-1990, then 1990 to 2000, 2000- 2010 and then this most recent decade. There was not a one step process but something done continually as the model had to evolve w.r.t various growth sectors arriving and then peaking and stabilising (and then you got to move on to more). It is like diversifying diet and/or increasing whats on offer in the buffet you can make.

Whatever we think of their totalitarian issues internally, they have accomplished certain basic things w.r.t their credit rating, investment climate and govt budgeting/central banking....compared to earlier where their system was totally different and isolated.

I can do the analysis for India too (which has a mix of success and also same structural problems turkey is having at a different kind of setting/inertia relative to it)

The thing is Turkey for 21st century so far can be broadly split into two timeframes:

2000 - 2010

and 2010 - 2020.

It must ask what has gone wrong in the 2nd one compared to 1st. Why didn't the growth recover quickly (after 08/09 world crisis) and start compounding at least half the rate it did in the previous decade.

It is a matter of the system not reforming enough and the earlier "easier" growth hitting ceiling and compressed under it.

Something has to give there.

You do good things, good things happen to you. Has nothing to do with IMF....that has coincidental intersection on some issues but definitely no need to follow their agenda hand in glove....rather everything should be analysed pragmatically and taken aboard. Turkey has no dearth of experience in the field to do it, the govt must be pragmatic and listen.

 

[Nilgiri]

FDI has always been welcome but I would rather persevere and exploit our national resources and support our development on national resources than allowing foreigners to have big say on our economy. Turkey's growth potential is bigger than any nation in almost all the world but I would rather have it grow a natural growth rather than one on steroids.

Well sure, but the philosophy doesn't follow what Turkey govt has been doing on foreign debt then.

I am simply saying if you want to orient the foreign flow in capital account (given current account will always have some reflection here), the hierarchy is roughly:

1) FDI
2) FPI
3) Private sector loans/bonds
4) Govt bonds and loans etc

There is tiers within FDI and FPI (i.e what does it provide that is new for turkey to absorb and get good at later)....but important thing is that the risk is bourne by the investor and not turkish taxpayers and public.

3) is a loan but at least risk is taken by a private turkish entity rather than public taxpayer.

Instead Turkish govt has gone for a huge intake of (4)...and there has been lot of uneccesary prestige projects and such...when really you need tier 1 stuff that leads to factories and jobs and exports.

So if it was truly serious about your philosophy of say low FDI (and low capital account activity)...it wouldnt do the way worse thing w.r.t foreign loans (foreign money it is taking on taxpayer's risk).

The best pragmatic step imo, is always to convert as much of (4) to the higher tiers as first step.

That is the reform that Turkey could have done already, it is still not too late...but it needs to move to do it.

 

[mulj]

I can go into what is wrong with what IMF does and has done.....but I am just talking from common sense view here given Turkey does participate in USD system globally.

It has to be seen as equity, asset and flow pressure like any other.

You think the PRC got from A to B by not doing this stuff with their capital account? It is worth to study what they did from 1980-1990, then 1990 to 2000, 2000- 2010 and then this most recent decade. There was not a one step process but something done continually as the model had to evolve w.r.t various growth sectors arriving and then peaking and stabilising (and then you got to move on to more). It is like diversifying diet and/or increasing whats on offer in the buffet you can make.

Whatever we think of their totalitarian issues internally, they have accomplished certain basic things w.r.t their credit rating, investment climate and govt budgeting/central banking....compared to earlier where their system was totally different and isolated.

I can do the analysis for India too (which has a mix of success and also same structural problems turkey is having at a different kind of setting/inertia relative to it)

The thing is Turkey for 21st century so far can be broadly split into two timeframes:

2000 - 2010

and 2010 - 2020.

It must ask what has gone wrong in the 2nd one compared to 1st. Why didn't the growth recover quickly (after 08/09 world crisis) and start compounding at least half the rate it did in the previous decade.

It is a matter of the system not reforming enough and the earlier "easier" growth hitting ceiling and compressed under it.

Something has to give there.

You do good things, good things happen to you. Has nothing to do with IMF....that has coincidental intersection on some issues but definitely no need to follow their agenda hand in glove....rather everything should be analysed pragmatically and taken aboard. Turkey has no dearth of experience in the field to do it, the govt must be pragmatic and listen.

yes, but china road can not be applied everywhere, they are more or less selfsustained mechanism and they really did use well west hunger for cheap products. Turkey is much smaller country with lets say equal ambitions and much more challenges along the way, by my opinion based on observations in last decade and setting up conditions for Turkey emerging as one of the major global economy players. i would say that they are ready in term of infrastructure, know how, industrial base and equipment. those current hardships are echo chambers of weak starting post from past. if you follow their expanding presence in military market. logical conclusion would be that civilian products will follow and that should make desired numbers.

 

[Nilgiri]

yes, but china road can not be applied everywhere, they are more or less selfsustained mechanism and they really did use well west hunger for cheap products. Turkey is much smaller country with lets say equal ambitions and much more challenges along the way, by my opinion based on observations in last decade and setting up conditions for Turkey emerging as one of the major global economy players. i would say that they are ready in term of infrastructure, know how, industrial base and equipment. those current hardships are echo chambers of weak starting post from past. if you follow their expanding presence in military market. logical conclusion would be that civilian products will follow and that should make desired numbers.

Of course it is not a 1:1 fit, I am just saying learn what is applicable and implement. There is lot of first principles stuff that Turkey govt has missed out on this decade. (Same goes for India btw).

It is not saying the 2nd , 3rd , 4th principle stuff downstream is all the exact same at all. That will be different and unique to each country.

Current hardships cannot be put as simply echo chambers of the past, there are procedural policy issues that Turkey has not implemented this decade that has led to opportunity foregone.

The fact Turkey did lot better growth rise in 2000 - 2010 speaks to this. If nothing devolved to slow the growth rate...then something in system obviously has to evolve....otherwise Turkey is in some kind of pot-boiler of neither here nor there...and that is potential that is squandered if you ask me.

 

[mulj]

Of course it is not a 1:1 fit, I am just saying learn what is applicable and implement. There is lot of first principles stuff that Turkey govt has missed out on this decade. (Same goes for India btw).

It is not saying the 2nd , 3rd , 4th principle stuff downstream is all the exact same at all. That will be different and unique to each country.

Current hardships cannot be put as simply echo chambers of the past, there are procedural policy issues that Turkey has not implemented this decade that has led to opportunity foregone.

The fact Turkey did lot better growth rise in 2000 - 2010 speaks to this. If nothing devolved to slow the growth rate...then something in system obviously has to evolve....otherwise Turkey is in some kind of pot-boiler of neither here nor there...and that is potential that is squandered if you ask me.

well, lets agree that we disagree, i think that preconditions are set for steady growth.

 

[Zafer]

Well sure, but the philosophy doesn't follow what Turkey govt has been doing on foreign debt then.

I am simply saying if you want to orient the foreign flow in capital account (given current account will always have some reflection here), the hierarchy is roughly:

1) FDI
2) FPI
3) Private sector loans/bonds
4) Govt bonds and loans etc

There is tiers within FDI and FPI (i.e what does it provide that is new for turkey to absorb and get good at later)....but important thing is that the risk is bourne by the investor and not turkish taxpayers and public.

3) is a loan but at least risk is taken by a private turkish entity rather than public taxpayer.

Instead Turkish govt has gone for a huge intake of (4)...and there has been lot of uneccesary prestige projects and such...when really you need tier 1 stuff that leads to factories and jobs and exports.

So if it was truly serious about your philosophy of say low FDI (and low capital account activity)...it wouldnt do the way worse thing w.r.t foreign loans (foreign money it is taking on taxpayer's risk).

The best pragmatic step imo, is always to convert as much of (4) to the higher tiers as first step.

That is the reform that Turkey could have done already, it is still not too late...but it needs to move to do it.

International politics has a big role in national economy. If you want to improve the ratings to attract funds then you need to cut down on conflicting with the lender's political interest which is a no go for Turkey. There are gains to be made in the medium to long term with the political moves Turkey is making in its region.

 

[Deliorman]

Sure why not, all pointed things could be reverse directed and justified, regarding investment climate minor issue, political relations are main one for possible lack of it. education and brain drainage are important and agree with that, could have strong impact for future if it is not adequate.
at the end of the day Turkey was one of the best economies last year, you can not twist that around by showing particular examples of negativity

Brate, I am young but I remember well how in 2010 and 2011 Turkey had huge GDP growths of like 7-8-9% a year and everything looked amazing. Yet there were economists who were warning how that growth is artificial and the bubble will burst one day.

I didn’t believe them and thought that they are just a bunch of Turk- haters and are jealous because I was a student and had no idea about economics. They were citing some strange stuff like “the huge foreign trade deficits, the growing private debts, the dependence on foreign investments, the construction boom that is far outpacing the growth in industry”.

The truth is that Turkish economic growth was never based on solid base and structure but rather on short term gains and solutions. So a few years later the balloon just popped...

 

[Ryder]

in simple words Turkey should accept dictate of MMF/IMF, do not know if that would be correct move for longer perspective in correlation with Turkey foreign policy ambitions. With higher employment rates those mentioned disbalances should be eased and that is were focus should be primarely directed. If Turkey achieves 10-15% unemployment rates then they will have more space and reserves for structural reforms by themselfs.

Imf and the world bank are two of the biggest scumbags in the world.

The world would be better off without them.

 

[mulj]

Brate, I am young but I remember well how in 2010 and 2011 Turkey had huge GDP growths of like 7-8-9% a year and everything looked amazing. Yet there were economists who were warning how that growth is artificial and the bubble will burst one day.

I didn’t believe them and thought that they are just a bunch of Turk- haters and are jealous because I was a student and had no idea about economics. They were citing some strange stuff like “the huge foreign trade deficits, the growing private debts, the dependence on foreign investments, the construction boom that is far outpacing the growth in industry”.

The truth is that Turkish economic growth was never based on solid base and structure but rather on short term gains and solutions. So a few years later the balloon just popped...

Brate , you can look like that too, that construction buble was harmfull but it also transformed big cities and infrastructure providing higher quality of life, so that is not complete waste of money as some value is added, sure there could be some more balance in allocating investment and better control to avoid shady speculations and give some breath to other industries to. Partially because of that Turkey is one of the most attractive countries for retiring people and people who wants to have appartment, house in turkey and lot of them are comenig to live im Turkey. Do you know that only in last year about couple of hundreds appartments were bought in mediterrian, izmir and istanbul only from bosnian people, so you can not disregard that construction bubble as total failure, it established strong branch of industry world wide spekaing.
I onow ordinary folks are wanting higher wages and biger standard and it will come with sofistication and diversification of your economy, if there was not syria war we would not have conversation at all, it is real hard to handle everything without mistakes and overfocusing on one particular goal disregarding everything around it does not help.
I agree that state efficency and better managment is always needed but that can not also go without politic change on elections.
Also, i woul not like to sound cheap and salting brain to you and others who oppose erdogan and akp, you have lot of valid points but on the other hand you also make sometimes statements that do not help, it is like replica of turkey political comstelation.
At the end what is most important is that you continue to aquire new technologies and r&d, it will eventually will reload itself into economy, regarding that you did impressive job last 10 years.

 

[the]

https://twitter.com/i/web/status/1361359319288143873

The foundations of the first factories will be laid this year in the TEKNOSAB Technology Organized Industrial Zone, where infrastructure construction continues on an 8 thousand decare area in Bursa Karacabey. 150 thousand jobs and 40 billion dollars of exports are targeted in the OIZ, which will be an Advanced Technology based production center.

Does anyone know the expected date of completion?

 

[what]

Its good that Lira is stabilizing or even gaining vs. Dollar & Euro. Its a hard decision but the right one. Time for some structural reforms, otherwise once Erdogan has enough from the interest rates we will repeat the same mistakes over and over again.

 

[Nilgiri]

International politics has a big role in national economy. If you want to improve the ratings to attract funds then you need to cut down on conflicting with the lender's political interest which is a no go for Turkey. There are gains to be made in the medium to long term with the political moves Turkey is making in its region.

Again if this were really the case/philosophy of the last 10 years....Turkish govt would not be going for loan buffet from the same countries.

They gain far far more leverage on you that way compared to FDI...given who is holding/managing the risk in the end (and gets burdened with cost later if things dont work out).

This is what I meant by the tiers, if 1 is not good or not on offer, why take a whole bunch more of 4?


Even running with your international geopolitics factor for sake of argument, I am just saying TR govt reform needs to move to hedge here at far higher quality compared to what its doing.

It needed to do this long time ago and its still not doing it.

If there is conspiracy etc because of geopolitics etc to not invest in you in high quality way...then why take and expand even worse loans from the same folks?

If there is some enforced autarky from outside, there needs commensurate autarkic discipline for it from inside....for this argument to hold.

For sake of argument, if they not letting you in to dine (see the sign? no turks allowed or allowed only in these hours):

A) just go home (dont forget this slight, dont get angry and make a scene... but get even later when you big enough)

B) eat what wifey or yourself can buy/grow and cook...rather than grab a whole bunch of overflow that the same "no-turks-allowed" snob-brigade wont eat themselves yet deem ripe to offer you.

C) You just play into their BS in worse way by the loans right? By geopolitics logic do you not erode dignity and cut your nose to spite your face...byt going for loans...that too on public taxpayer risk?

I personally dont subscribe to this argument either given Turkey credit rating did get to prime range during mid of last decade...geopolitically it was not all that different.

But TR govt did not double down on what worked to get that...and let lot of things lapse again....largely external to geopolitics again if you follow the debt statistics.

Broadly, geopolitics animus argument only works so much (especially with named+well-founded countries/civs of note that are not pushovers).

Even up to mid 70s, mobs of chinese "red guard" students were bayoneting effigies of Nixon in full open view of the new US embassy set up.

Yet just few short years later with this severe chasm of geopolitical relations (and the threat it posed at an immense scale) still really bad (but improving)...the chequebook from wall "yuan is green as the dollar" street started to open already...and really flourish even after Tianenmen-related sanctions.

Thus, given this, there is simply stuff Turkey is foregoing right now, right on its doorstep w.r.t EU investors (given EU logistics + market right there next door to turkey)...because of bad policy from the govt. reluctance to debate and reform there.

Trust me, I get very angry when I need to speak about this w.r.t India case too (given our potential squandered and we have similar divide of 2000 - 2010 and 2010 - 2020, again because of our reform reluctance mounting and ceiling compression due to internal political expedience/agenda BS).....but Turkey I can air same thing out in more neutral sustained way.

If one wants to give proper credit to a government, political party or a leader reasonably and credibly....one must first call out their flaws and mistakes too...and stand by it as long as those exist in operation and consequence.

Then and only then is there proper national cohesion and unity flourishing at the level needed (at timeframes most long and hopefully eternal, god-willing, to nation)....rather than erosion of this by what is dictated and divided by some political arena (in timeframe that is far shorter and temporary to nation).

 

[Zafer]

Again if this were really the case/philosophy of the last 10 years....Turkish govt would not be going for loan buffet from the same countries.

They gain far far more leverage on you that way compared to FDI...given who is holding/managing the risk in the end (and gets burdened with cost later if things dont work out).

This is what I meant by the tiers, if 1 is not good or not on offer, why take a whole bunch more of 4?


Even running with your international geopolitics factor for sake of argument, I am just saying TR govt reform needs to move to hedge here at far higher quality compared to what its doing.

It needed to do this long time ago and its still not doing it.

If there is conspiracy etc because of geopolitics etc to not invest in you in high quality way...then why take and expand even worse loans from the same folks?

If there is some enforced autarky from outside, there needs commensurate autarkic discipline for it from inside....for this argument to hold.

For sake of argument, if they not letting you in to dine (see the sign? no turks allowed or allowed only in these hours):

A) just go home (dont forget this slight, dont get angry and make a scene... but get even later when you big enough)

B) eat what wifey or yourself can buy/grow and cook...rather than grab a whole bunch of overflow that the same "no-turks-allowed" snob-brigade wont eat themselves yet deem ripe to offer you.

C) You just play into their BS in worse way by the loans right? By geopolitics logic do you not erode dignity and cut your nose to spite your face...byt going for loans...that too on public taxpayer risk?

I personally dont subscribe to this argument either given Turkey credit rating did get to prime range during mid of last decade...geopolitically it was not all that different.

But TR govt did not double down on what worked to get that...and let lot of things lapse again....largely external to geopolitics again if you follow the debt statistics.

Broadly, geopolitics animus argument only works so much (especially with named+well-founded countries/civs of note that are not pushovers).

Even up to mid 70s, mobs of chinese "red guard" students were bayoneting effigies of Nixon in full open view of the new US embassy set up.

Yet just few short years later with this severe chasm of geopolitical relations (and the threat it posed at an immense scale) still really bad (but improving)...the chequebook from wall "yuan is green as the dollar" street started to open already...and really flourish even after Tianenmen-related sanctions.

Thus, given this, there is simply stuff Turkey is foregoing right now, right on its doorstep w.r.t EU investors (given EU logistics + market right there next door to turkey)...because of bad policy from the govt. reluctance to debate and reform there.

Trust me, I get very angry when I need to speak about this w.r.t India case too (given our potential squandered and we have similar divide of 2000 - 2010 and 2010 - 2020, again because of our reform reluctance mounting and ceiling compression due to internal political expedience/agenda BS).....but Turkey I can air same thing out in more neutral sustained way.

If one wants to give proper credit to a government, political party or a leader reasonably and credibly....one must first call out their flaws and mistakes too...and stand by it as long as those exist in operation and consequence.

Then and only then is there proper national cohesion and unity flourishing at the level needed (at timeframes most long and hopefully eternal, god-willing, to nation)....rather than erosion of this by what is dictated and divided by some political arena (in timeframe that is far shorter and temporary to nation).

You are disregarding very big factors regarding Turkey's foreign politics.
There was a coup attempt in mid 2016 which marks a breaking point in Turkey's relations with western lenders.
You can not just say that prior policies applies to the future.

Real life is very different from ideal conditions, more so in Turkey's situation.

 

[Nilgiri]

There was a coup attempt in mid 2016 which marks a breaking point in Turkey's relations with western lenders.

From 2011 - 2016, the average foreign loan (gross) intake by Turkey was 65 billion USD per year.

From 2017 - 2019 it was:

2017: 88 billion USD
2018: 69 billion USD
2019: 59 billion USD

works out to an average of about 72 billion USD per year intake (2017 - 2019). Again I ask wouldn't this be better as FDI or nothing? The issue is Turkey needs a certain inflow per year to simply pay off the debt that comes due each year....but wouldn't the source for this be better by non-loans (i.e hard investment) to prevent loan-cycle bubbles?

IDS Online Tables_Standard

datatopics.worldbank.org

Majority of this by far came from western lenders:

These are the countries with the most to lose from Turkey’s currency crisis

One country has been especially gung-ho with Turkey credit.

qz.com

So what is the big change here?

Rather due to turkish lira depreciation and lira inflation, Turkey's nominal GDP in USD has dropped to less than 750 billion USD now (from approaching near 1 trillion around 2013)...and thus external debt to GDP has risen to 60% now (even though absolute level has stabilised around 450 billion or so USD given Turkey pays back about the same it takes in for last few years, the loan-cycle repayment described earlier...i.e net intake is now averaging to zero by the hard circumstance mounting up).

This level used to be below 40%:

Turkey External Debt: % of GDP, 1989 – 2024 | CEIC Data

Turkey External Debt accounted for 45.6 % of the country's Nominal GDP in 2023, compared with the ratio of 51.2 % in the previous year.

www.ceicdata.com

More on this loan cycle problem:

Erdogan Has Hidden an Economic Disaster Deep in Turkish Banks

And he won’t be able to keep the game going for much longer.

foreignpolicy.com

Turkish economy cannot operate like this going forward. It needs hard cold investment (and sizeable breakouts in productive sectors), not bonds and loans to pay off previous bonds and loans ....and simply using most of the time delay in that for maintaining consumption level or countering inflation.

Can't be kicking can down the road simply hoping even bigger issue never comes. Turkey govt must reform and change the dynamic of operation in assured way for this decade.

 

[Deliorman]

@Nilgiri , bro you are wasting your time trying to explain (simple) stuff to someone that is just mentally unable to understand you. Let him live in his fairytale world and that’s it.

 

[Saithan]

To be honest @Nilgiri is very good at articulating arguments explaining the turkish economies woes and gives good examples. But you will never get any RTE supporter to accept you are right. AKP abused many laws and wasted money and started to drive the growth with construction projects and they’ve never stopped because without constructions projects the unemployment will be even worse, is my take.

Add to that RTE took in 5 million Syrian refugees, tried to bribe the people with visafree travel to Europe.

 

[Zafer]

From 2011 - 2016, the average foreign loan (gross) intake by Turkey was 65 billion USD per year.

From 2017 - 2019 it was:

2017: 88 billion USD
2018: 69 billion USD
2019: 59 billion USD

works out to an average of about 72 billion USD per year intake (2017 - 2019). Again I ask wouldn't this be better as FDI or nothing? The issue is Turkey needs a certain inflow per year to simply pay off the debt that comes due each year....but wouldn't the source for this be better by non-loans (i.e hard investment) to prevent loan-cycle bubbles?

IDS Online Tables_Standard

datatopics.worldbank.org

Majority of this by far came from western lenders:

These are the countries with the most to lose from Turkey’s currency crisis

One country has been especially gung-ho with Turkey credit.

qz.com

So what is the big change here?

Rather due to turkish lira depreciation and lira inflation, Turkey's nominal GDP in USD has dropped to less than 750 billion USD now (from approaching near 1 trillion around 2013)...and thus external debt to GDP has risen to 60% now (even though absolute level has stabilised around 450 billion or so USD given Turkey pays back about the same it takes in for last few years, the loan-cycle repayment described earlier...i.e net intake is now averaging to zero by the hard circumstance mounting up).

This level used to be below 40%:

Turkey External Debt: % of GDP, 1989 – 2024 | CEIC Data

Turkey External Debt accounted for 45.6 % of the country's Nominal GDP in 2023, compared with the ratio of 51.2 % in the previous year.

www.ceicdata.com

More on this loan cycle problem:

Erdogan Has Hidden an Economic Disaster Deep in Turkish Banks

And he won’t be able to keep the game going for much longer.

foreignpolicy.com

Turkish economy cannot operate like this going forward. It needs hard cold investment (and sizeable breakouts in productive sectors), not bonds and loans to pay off previous bonds and loans ....and simply using most of the time delay in that for maintaining consumption level or countering inflation.

Can't be kicking can down the road simply hoping even bigger issue never comes. Turkey govt must reform and change the dynamic of operation in assured way for this decade.

Turkey can start a new military campaign towards Syria and Iraq.
What kind of incentives and reforms can attract FDI or icrease credit rating in that case. LOL

 

[Sinan]

Turkey to forbid chain markets from selling tobacco, electronics

In a major shift in retail trade, grocery store chains in Turkey will be forbidden from selling several items, including tobacco and electronic goods, and...

www.dailysabah.com

Idiocy on highest level, it’s likely aimed at hurting big ones like Migros, who isn’t supporting AKP.

Not exactly, it was actually Meral Akşener who brought this up and forced government to take action.

Big Chains, like A101, BIM even selling cell phones time to time. They sell everything. This is killing all the other small shops.

For instance they sell TV, since A101 can order thousands of TVs, they can acquire it cheaper and sell cheaper than small shops.