hero image

After President Recep Tayyip Erdogan took over the autonomy of the economic system in the country, Turkey has been facing growing weakness in its market. There was seen a sudden increase in selling in Turkey’s currency and this could put other evolving economies in jeopardy. Strategists, however, have not seen this as an omen of global financial breakdown or of a banking crisis.

Although a few banks of Europe invest in Turkey, they will not have such diverse effects as to cause a banking crisis. But talking about evolving economies, who are already suffering from tensions in global trade, and increasing interest rates could be under pressure if Turkey goes through a financial crisis.

William Jackson, an economist of emerging markets at Capital Economics in London said that Turkey runs a big risk because it is highly dependent on capital of other countries. The lira has gone down by 80 percent in comparison to the dollar during the previous year. This Friday, the lira went down by double digits as investors could not back it up anymore. In the midst of such a situation, President Erdogan’s attitude of invoking nationalism and shunning foreign countries by claiming that they want to see Turkey go down is not of any help. But there is also a large part of the population who follows him in his theatrics and does stunts like burning dollars.

The lira which was going 20 percent low once went down to 17 percent after political frictions with the US. The U.S. President Donald Trump gave permission to increase the rates of metals almost by double, on Turkey. This came also as a response to Turkey’s holding back of American pastor, Andrew Brunson, who was caught by Turkish forces after America made a failed attempt to destroy the rule of Erdogan.The increasing pressure on Turkey could weigh other emerging markets down.