Now, after nearly two years of a weakening currency, high debt and … He has famously argued that high interest rates cause inflation, which is like blaming abstinence for a hangover.
“They said, ‘Because of the economic crisis.’”When he was quoted saying so in a local newspaper, Lipton’s corporate parent, Unilever, demanded that he keep quiet, he says, telling him that Mr. Erdogan’s administration had been angered by mention of a crisis.Unilever declined to answer questions, while a spokeswoman in London, Gemma Shaw, emailed a brief statement: “The size and scale of our tea business around the world means that we regularly flex production up and down depending on the needs of the business.”According to Mr. Yuksel, Lipton must pay higher wages, but has been unable to pass on extra costs. This type of debt crisis isn’t pleasant, as Argentina or Greece or Pakistan could attest, but it is at least straightforward and familiar.
“The public debt numbers are a mirage.”The savviest companies are exploiting weakness as an opportunity. The economic turmoil and the uncertainty about how long it might last could have serious political consequences for Erdogan.Elections aren't scheduled until 2023, but some of Erdogan's former top allies have left to set up rival political parties and are preparing to oppose Erdogan's expected bid for another five-year term in office. Private companies confronted a further $138 billion in foreign exchange debt due in the next year. If party leaders begin to sense that Erdogan is losing what Yesilada calls his magic touch with the voters, there could be a move to bring elections forward, especially, he says, if fears of a currency collapse continue to rise.YESILADA: Mr. Erdogan has, at most, two or three months to successfully wind down this epidemic as well as to breathe some life into the economy, without a currency crisis.KENYON: In the meantime, the Turkish Medical Association has called on the government to be more forthcoming about the measures it's taking to combat the pandemic at home. The country has agreed more than a dozen standby deals with the International Monetary Fund, successfully completing only one – Turkish President Recep Tayyip Erdoğan’s governin party paid back a last loan tranche of the country’s most recent IMF accord just before the 2008 global financial crisis.Erdoğan has ruled out IMF financial aid, has slammed so-called “economic doom-mongers” for criticising his government's policies and says the economy will recover strongly in the second half of the year. But it would also deprive businesses of capital, yielding bankruptcy and joblessness, while constraining economic growth.Mr.
Inflation was also coming down, he said. Partnerships between the state and private companies have kept debts off government ledgers.“These major projects, when they fail, it’s going to be the government that is going to have to bail them out,” says Mr. Hakura, the Chatham House expert. Prices are rising, and shoppers are pulling back.Idil Ozbek and Muhammet Tasli, founders of the design and furniture store Hamm Design. But economist and political analyst Attila Yesilada says people are increasingly worried that the Turkish currency could suffer a huge drop in value, triggering rising inflation.ATILLA YESILADA: I think it is now a consensus in the economist community and, more importantly, the trader community that Central Bank reserves are so low that they can't stop an attack on the Turkish lira, and that by itself is a self-fulfilling prophecy.KENYON: Economists estimate that Turkey could see its GDP shrink by nearly a quarter unless broad and heavy public supports are quickly launched. It was characterized by the Turkish lira (TRY) plunging in value, high inflation, rising borrowing costs, and correspondingly rising loan defaults. The government's message was, essentially, don't worry.KENYON: Turkey's central bank governor stepped forward to focus on a rare bright spot amid the plunge in productivity and consumption. All rights reserved. ARHAVI, Turkey — The terraced rows of tea plants climbing the hills above the Black Sea used to glint like money.
The lira fell as low as 7.49 to the dollar on Thursday, passing its previous record low of 7.236 reached during Turkey's August 2018 currency crisis. But in recent years, as the lira has fallen, companies with revenues in lira and debts in dollars have seen their burdens expand.Turkey’s medium- and long-term foreign currency debts exceeded $328 billion as of the end of 2018, according to official data, with private companies responsible for about two-thirds. “They don’t know what will happen in two months, three months. “It may spill over to the local banking system.
The companies would have difficulty servicing those foreign currency obligations should the lira plunge, putting even more pressure on an already shaky banking system, they said.The lira fell to 7 per dollar last week, the lowest level since mid-May, when it hit an all-time low of 7.269 against the U.S. currency. Turkey’s looming economic crisis. "Erdoğan's gamble on cheap money and propping up the currency has failed," the FT It appears that the first wave of the health crisis will be over soon. Until a recent increase, Caykur, a state-owned tea company that dominates the industry, has maintained low prices under pressure from the government. We are going through a very hard time.”The latest indication came on Monday, as the Turkish currency, the lira, Turkey has avoided the meltdown that seemed possible last summer when the lira plunged precipitously, but safety is remote. The big borrowing has been by the country’s banks, including both private and state-owned banks—and that is where Turkey’s trouble has built up. It has slashed purchases of tea from local farmers, depressing commerce in surrounding towns and villages.“Everything is connected,” laments the mayor of Arhavi, Vasfi Kurdoglu. Mr. Erdogan has tapped state-owned banks to finance favored projects.