της Alina Lehtinen για το Southeast European Times στην Κωνσταντινούπολη.
Turkey has been praised in recent weeks for representing a model that countries in the Middle East and North Africa can follow on their path to democracy.
However, Turkey might not be as immune to the turmoil as previously reported. The rising price of oil caused by the crisis could be bad news for the country's economy, which already is bracing for higher inflation towards the end of the year.
"With a current account deficit that is already heading towards 7% of GDP, a fresh spike in global oil prices is the last thing that Turkey needs," Neil Shearing, senior Emerging Markets Economist from Capital Economics, told SETimes.
Politically, Turkey is a relatively stable country. No one expects mass protests on the streets of Ankara demanding that the ruling Justice and Development Party resign, especially in light of elections scheduled in June.
However, Turkey's economic stability has already been affected by the unrest. Turkey's benchmark 22-month bond yield rose to 8.98% in February and the country's main IMKB-100 index on Istanbul's Stock Exchange (ISE) fell by 7.5%.
"The intensification of the crisis in the Middle East has caused Turkish stocks to drop by 7% [two weeks ago], while the lira has fallen by nearly 2% against the US dollar," notes Shearing.
"In an adverse case scenario, in which the turmoil spreads to the rest of the region and risk sentiment becomes extremely negative, Turkey remains among the vulnerable countries with its high current account deficit," said Selim Cakir, an economist from TEB bank.
Turkey imports much of its energy from the Middle East. Iran is Turkey's second largest gas supplier after Russia. According to Timothy Ash of the Royal Bank of Scotland, Turkey's energy costs are $20 billion annually.
Turkey's inflation levels are currently at a record low 5%. However, the rising oil prices could contribute to inflation growing more rapidly. Turkey's Central Bank predicts inflation to be 5.9% by the end of the year. The Bank, which decreased its benchmark interest rate to 6.25% on January 20th, will reconsider its annual inflation estimate in April.
Last year, the Middle East's share of Turkey's exports was 20.3%. This is up from 9.6% in 2002. The country has also invested heavily in the region over the past decade. Turkish business in these regions might suffer as a result of the current unrest.
"With economies like Egypt and Libya rocked by political unrest, governments herein are likely to put more money to work at home, being less focused on foreign investment projects, eg in Turkey," Ash said.
But Nicholas Danforth, a co-research associate from a nonprofit organisation the Project on Middle East Democracy or POMED, is not worried about Turkey's economic future in the face of the turmoil.
"While in the short term instability might cut into the profits of Turkish firms in the Middle East and North Africa, there is no reason to think that in the long term the emergence of new governments will change the economic dynamics or lessen the appeal of Turkish goods and services," he told SETimes.
Even though there are signs that Turkey is struggling economically, the region's instability is unlikely to have a long-term effect on the country's economy. After a domestic banking crisis in 2000-2001, Turkey's banking sector was well prepared for the global financial meltdown. However, some experts are worried that the Turkish banks have been handing out loans too generously this year.
"Several Turkish banks lent too much credit in the first two months of the year and the sector, or individual banks, could face additional measures to crimp lending if the situation continues," says Economy Minister Ali Babacan.
Despite the surrounding unrest, the Turkish economy is still the fastest growing in the region. Although its investments in the Middle East and North Africa are relatively large, Turkey's number one trading partner is still the EU. Last year, Western Europe accounted for 46.3% of Turkey's exports.
"While Turkey's trade ties with the Middle East are much stronger than those of other countries elsewhere in emerging Europe, Western Europe remains by far its most important export market," said Shearing.
Turkey has a lot of companies operating all across the Middle East and North Africa. There are around 25,000 Turkish citizens and more than 200 companies in Libya alone.
Turkish construction projects in the country are worth $15 billion. Turkish TAV Construction, a subsidiary of Akfen Holding, is currently building an airport in Tripoli. Since the turmoil began in Libya, Akfen shares have fallen by 4%.
According to TEB economist Cakir, even though about one-third of Turkey's exports go to the Middle East and North Africa, the instability is unlikely to hit Turkey's economy too hard since the countries currently going through turmoil, such as Libya and Egypt only account for 5% of Turkey's total exports.
"Even in an extreme case in which one assumes that Turkey's exports to the epicentre of the turmoil are halted, this would jeopardise a relatively small portion of export proceeds," Cakir said.
There may also be a positive consequence. The unrest makes Turkey appear as a safe place to invest. More investments, which might otherwise have gone to other countries in the Middle East, might now flow to Turkey -- a country that is seen as the most stable in the region.
"Given Tunisia, a German car industry supplier that manufactures mostly for Eastern Europe is planning to move its investments to Turkey," executive shareholder of IEG Stefan Heilman told Hurriyet Daily News on March 1st. He added that other companies have also expressed their interest in transferring their funds from North Africa to Turkey.
POMED's Danforth agrees: "Turmoil could increase Turkey's attractiveness as a destination for foreign direct investment by highlighting its stability vis a vis other country's in the region."
Πηγή:
www.setimes.com
Turkey has been praised in recent weeks for representing a model that countries in the Middle East and North Africa can follow on their path to democracy.
However, Turkey might not be as immune to the turmoil as previously reported. The rising price of oil caused by the crisis could be bad news for the country's economy, which already is bracing for higher inflation towards the end of the year.
"With a current account deficit that is already heading towards 7% of GDP, a fresh spike in global oil prices is the last thing that Turkey needs," Neil Shearing, senior Emerging Markets Economist from Capital Economics, told SETimes.
Politically, Turkey is a relatively stable country. No one expects mass protests on the streets of Ankara demanding that the ruling Justice and Development Party resign, especially in light of elections scheduled in June.
However, Turkey's economic stability has already been affected by the unrest. Turkey's benchmark 22-month bond yield rose to 8.98% in February and the country's main IMKB-100 index on Istanbul's Stock Exchange (ISE) fell by 7.5%.
"The intensification of the crisis in the Middle East has caused Turkish stocks to drop by 7% [two weeks ago], while the lira has fallen by nearly 2% against the US dollar," notes Shearing.
"In an adverse case scenario, in which the turmoil spreads to the rest of the region and risk sentiment becomes extremely negative, Turkey remains among the vulnerable countries with its high current account deficit," said Selim Cakir, an economist from TEB bank.
Turkey imports much of its energy from the Middle East. Iran is Turkey's second largest gas supplier after Russia. According to Timothy Ash of the Royal Bank of Scotland, Turkey's energy costs are $20 billion annually.
Turkey's inflation levels are currently at a record low 5%. However, the rising oil prices could contribute to inflation growing more rapidly. Turkey's Central Bank predicts inflation to be 5.9% by the end of the year. The Bank, which decreased its benchmark interest rate to 6.25% on January 20th, will reconsider its annual inflation estimate in April.
Last year, the Middle East's share of Turkey's exports was 20.3%. This is up from 9.6% in 2002. The country has also invested heavily in the region over the past decade. Turkish business in these regions might suffer as a result of the current unrest.
"With economies like Egypt and Libya rocked by political unrest, governments herein are likely to put more money to work at home, being less focused on foreign investment projects, eg in Turkey," Ash said.
But Nicholas Danforth, a co-research associate from a nonprofit organisation the Project on Middle East Democracy or POMED, is not worried about Turkey's economic future in the face of the turmoil.
"While in the short term instability might cut into the profits of Turkish firms in the Middle East and North Africa, there is no reason to think that in the long term the emergence of new governments will change the economic dynamics or lessen the appeal of Turkish goods and services," he told SETimes.
Even though there are signs that Turkey is struggling economically, the region's instability is unlikely to have a long-term effect on the country's economy. After a domestic banking crisis in 2000-2001, Turkey's banking sector was well prepared for the global financial meltdown. However, some experts are worried that the Turkish banks have been handing out loans too generously this year.
"Several Turkish banks lent too much credit in the first two months of the year and the sector, or individual banks, could face additional measures to crimp lending if the situation continues," says Economy Minister Ali Babacan.
Despite the surrounding unrest, the Turkish economy is still the fastest growing in the region. Although its investments in the Middle East and North Africa are relatively large, Turkey's number one trading partner is still the EU. Last year, Western Europe accounted for 46.3% of Turkey's exports.
"While Turkey's trade ties with the Middle East are much stronger than those of other countries elsewhere in emerging Europe, Western Europe remains by far its most important export market," said Shearing.
Turkey has a lot of companies operating all across the Middle East and North Africa. There are around 25,000 Turkish citizens and more than 200 companies in Libya alone.
Turkish construction projects in the country are worth $15 billion. Turkish TAV Construction, a subsidiary of Akfen Holding, is currently building an airport in Tripoli. Since the turmoil began in Libya, Akfen shares have fallen by 4%.
According to TEB economist Cakir, even though about one-third of Turkey's exports go to the Middle East and North Africa, the instability is unlikely to hit Turkey's economy too hard since the countries currently going through turmoil, such as Libya and Egypt only account for 5% of Turkey's total exports.
"Even in an extreme case in which one assumes that Turkey's exports to the epicentre of the turmoil are halted, this would jeopardise a relatively small portion of export proceeds," Cakir said.
There may also be a positive consequence. The unrest makes Turkey appear as a safe place to invest. More investments, which might otherwise have gone to other countries in the Middle East, might now flow to Turkey -- a country that is seen as the most stable in the region.
"Given Tunisia, a German car industry supplier that manufactures mostly for Eastern Europe is planning to move its investments to Turkey," executive shareholder of IEG Stefan Heilman told Hurriyet Daily News on March 1st. He added that other companies have also expressed their interest in transferring their funds from North Africa to Turkey.
POMED's Danforth agrees: "Turmoil could increase Turkey's attractiveness as a destination for foreign direct investment by highlighting its stability vis a vis other country's in the region."
Πηγή:
www.setimes.com
