Amid the calls of boycott from Arab countries and Coronavirus induced lockdown, the Turkish economy and its currency are touching the historic low. The exports to the United States have fallen by almost a quarter of the total volume, and the non-governmental Arab chamber of Commerce has called for the total boycott of Turkish imports.
The major source of foreign currency and one of the significant part of the Turkish economy was tourism, which collapsed with the onslaught of the Chinese virus. Now exports to Arab countries, the next big source of American dollars, are also set to collapse amid the calls of the boycott of Turkish goods, and this is giving sleepless nights to Turkish.
“Any official or unofficial initiative to block trade between the two countries will have negative repercussions on our trade relations and be detrimental to the economies of both countries,” eight Turkish business groups, including textile exporters and contractors, said in a statement.
The problems with the Turkish economy are on multiple fronts as the self-declared caliph, Erdogan has engaged the resources on almost every possible end. The foreign investors pulled all the money from the country amid the domestic and foreign instability in the country and this led to the collapse of Lira, the Turkish currency.
The Turkish central bank kept the rates low despite rising inflation and falling value of Lira as Erdogan was averse to high rates because it discourages lending. But, the central bank was forced to increase rates by 2 points- from 8.25 to 10.25- as inflation touched double digits. Moreover, the banks took the lending rates further north through unconventional monetary policies while keeping the headline number at 10.25. The effective lending rate in Turkey is around 11.5 per cent, and, despite that, Lira has recovered little while inflation remains in double digits.
In a nutshell, all the macroeconomic indicators- foreign exchange reserves, inflation, policy rate, GDP growth- are on the poor side of the index. The GDP shrank in double digits in the last quarter and expected to shrink further in the ongoing quarter.
The Turkish business houses are crying foul as Arab countries, the last resort for the Turkish economy, calls for the boycott of Turkish goods amidst worsening ties between the two blocks as they fight for supremacy in Sunni Islamic world.
“We deeply regret the discriminatory treatment that our companies face in Saudi Arabia … We expect Saudi authorities to take concrete initiatives to resolve the problems,” said the business groups, which included the Foreign Economic Relations Board (DEIK), the Turkish Exporters’ Assembly (TIM) and the Union of Chambers and Commodity Exchanges of Turkey (TOBB).
The authoritarian policies of Erdogan are pushing Turkey in the medieval world. Erdogan dreams are bringing back the Ottoman Empire’s glory of the medieval world, that too through medieval practices. His promotion of Ottoman inspired Turkish TV series, and aggressive export of these soap operas in countries like Pakistan shows that he wants to establish Turkey as the centre of the Islamic world and designate himself as caliph. But, the modern world runs on sound economy and technology, and Turkey is losing on both fronts as it involves itself in war with the Arab world as well as Western countries.
