Foreign investors are leaving the Turkish market, banking sectors’ assets are falling and banks’ capitals are deteriorating. Consequently, the Turkish economy and Lira are to suffer from an expected severe fall. In addition, Turkey could face the possibility of dropping its lira credit rating.
According to speculators, the Turkish stock market is falling while yields of bonds are expected to creep up. In regard to the Turkish banking sector, loan rates have decreased and credit cost has increased.
Analysts are expecting the negative consequences of Erdoğan’s decisions. It is worthy to note that Turkey has a history of military coups; Turkish military coups took place in 1960, 1971, 1980 which was the most brutal and finally 1997 which was known as “Coup after Modernism”.
Market imbalance will continue for long as a consequence of Turkish conflicts with Kurds in the south of Turkey and the frequent late bombings of Ankara and Istanbul. Moreover, tourism in Turkey will be influenced negatively as bombings and suicidal attacks keep taking place in abundance, noting that bombings and suicidal rates have reached its peak since 1999.
Similarly, Consumption rates are to fall and economic development is to slow down, noting that the Turkish economic growth is estimated at 3.8 per cent. In addition, flotation rates are rising due to oil price increase and lira price fall. Moody’s Corporation, an American credit rating agency, says that Turkey’s credit rating is «negative».As for the Turkish lira’s value that was registered yesterday morning, it witnessed a fall of 4.8 per cent. The Turkish lira is now valued at 3.16 to $1 as against 2.878, the last lira price register. According to Economy Monitor Magazine, the expected lira price in the next weeks is 3.10 to $1.
Turkish-Russian conflicts will add to the economy slowdown that Turkey is about to encounter, noting that Russian tourists’ number has decreased as a result of the conflict.
In conclusion, the main barrier to foreign investment in Turkey is consumption growth slowdown and revenue fall, especially after Turkish political instability as a result of the failed, Turkish coup.
