Erdogan’s orthodoxy creates new economic problems 13 Sep 2023 Turkey’s president finally ditched his love of low interest rates and pledged to curb inflation, currently at 59%. But Tayyip Erdogan still needs growth and will boost spending to get that. Soaring budget deficits and a weak currency will keep the economy under pressure.
Firefighting leaves central banks on shaky ground 22 Jun 2023 Policymakers in the UK, Switzerland, Norway and Turkey all hiked rates on Thursday. Stubborn inflation gives them little choice, even though they may cause recessions. In London and Ankara, ratesetters’ job is made much harder by politicians’ own failures and need for scapegoats.
Erdogan win sends stark note on economy and votes 29 May 2023 People in Turkey effectively opted to prolong the president’s wild policies that have led to 44% inflation. The extension of his 20-year rule tees up the country to inch further away from the West. For global leaders, it’s a warning that success in money matters only goes so far.
Strongmen are riskier the more they stay in power 22 May 2023 Autocrats often seduce investors with promises to be good for business. But Turkey’s Tayyip Erdogan, Russia’s Vladimir Putin and Xi Jinping in China show this effect doesn’t last. The longer leaders stick around, the greater the risk of poor decisions, says Hugo Dixon.
Erdogan part three would be worse and the same 18 May 2023 The Turkish president is in a heated battle to lead the battered country. In this Viewsroom podcast, Breakingviews columnists discuss the risks Turkey faces if he stays in office, his rival’s offering and how the outcome of the election will impact the rest of the world.
Turkey votes for long-term market instability 15 May 2023 With President Erdogan and his rival set for a May 28 runoff, uncertainty is the main upshot of the country’s elections. That prolongs the agony for a $900 bln economy plagued by 44% inflation and wild fiscal policies. An even weaker lira and warier foreign investors will ensue.
A post-Erdogan Turkey could come in from the cold 27 Feb 2023 Investors shunned the country as the president let inflation rip. He strained relations with the West by cosying up to Putin and did too little on climate change. An opposition win in coming elections, more likely after the recent earthquake, may change all that, says Hugo Dixon.
Gulf’s World Cup love-in has uncertain shelf life 25 Nov 2022 Egypt and Turkey used the tournament to smooth over old differences, and ex-rivals Saudi Arabia and Qatar are getting along. Riyadh may even use its new oil heft to put $5 bln in cash-strapped Ankara’s central bank. The risk is new tensions, perhaps over Iran, upend the goodwill.
Turkish mobile spat exposes state fund weakness 10 Jan 2022 Billionaire Mikhail Fridman wants to overhaul Turkcell’s board to boost the $3 bln group’s valuation. Turkey’s state wealth fund, which appoints most of the directors, looks an obstacle. With stakes in other ailing companies like Turkish Airlines, it’s proving a poor custodian.
Turkey’s lira prop-up plan is dangerous 21 Dec 2021 President Tayyip Erdogan is guaranteeing deposits against local currency drops. It’s tacit admission Turkey’s banks aren’t immune to fallout from his odd views on inflation and interest rates. Details are fuzzy but putting taxpayers on the hook for the lira is asking for trouble.
BBVA’s Turkey M&A logic beats currency chaos 24 Nov 2021 Just before the lira’s plunge, the Spanish bank offered to buy the 50% it doesn’t own of local lender Garanti. The crisis will push up bad debt and squeeze lending margins. But the target’s low valuation and the inefficiency of only owning half give BBVA reason enough to proceed.
Voters are last brake on Turkey’s lunatic express 19 Nov 2021 Bullied by President Tayyip Erdogan, the central bank slashed borrowing costs to 15%. Fearing runaway inflation, the lira plunged to record lows. With few other checks on a leader at war with interest rates, 2023 elections may be Turks’ best hope of restoring monetary sanity.
Viewsroom: European bank M&A, De-Dutching Shell 18 Nov 2021 Big lenders in the euro zone are doing deals, but not the kind investment bankers dream about. BNP Paribas is in U.S. retreat, BBVA bulks up in Turkey and KBC goes Bulgarian. Liam Proud explains. George Hay explains why the Anglo-Dutch oil major is dropping the Dutch bit.
EU banks march east towards muddy investment case 15 Nov 2021 BBVA may take full control of its Turkish unit for 2.2 bln euros and KBC is spending 1 bln euros on a Bulgarian rival. There’s logic to the deals. But boosting emerging-market risk and geographic sprawl carries a valuation penalty. Investors would rather have the cash themselves.
Turkey goes deeper into parallel monetary universe 23 Sep 2021 Ankara cut its main policy rate to 18% from 19%, kowtowing to President Erdogan just as other central banks take the opposite tack. A weaker lira and soaring energy bills add to the economy's inflation pains. With two years to another election, there’s little respite in sight.
Turkey’s monetary meddling offers scant rewards 15 Apr 2021 The country’s central bank kept its interest rate at 19%. Having replaced his chief rate-setter in March, President Tayyip Erdogan hasn’t yet got the lower borrowing costs he wants. Rising inflation, a weak currency and the loss of credibility mean policy will need to stay tight.
Turkey’s soft capital controls are transitory fix 29 Mar 2021 Subtle curbs that make it harder to sell the lira will slow its fall. They won’t be enough if the central bank’s new boss starts cutting rates under political pressure. President Tayyip Erdogan can impose tougher restrictions but will hurt the economy if he is too heavy-handed.
Viewsroom: Turkish trouble and emerging markets 25 Mar 2021 President Tayyip Erdogan’s abrupt firing of a third central bank governor forced investors to contemplate whether this might precipitate a run on financial assets in other developing markets, including South Africa. Breakingviews columnists discuss the implications.
Turkey’s battered banks face a slow-burn crisis 25 Mar 2021 A plummeting lira creates the risk of a funding squeeze for Garanti BBVA, Akbank, Isbank and others. But they’ve survived past crises without a bank run. The more likely problem for the sector is mounting bad debt, which will drag down returns and capital for years to come.
South Africa offers Erdogan an inflation lesson 23 Mar 2021 A steep plunge in the lira, of the sort seen this week after Turkey’s president fired his central bank boss, usually drags down the rand. Not this time. The South African currency’s resilience shows the value of a credible and independent central bank left free to control prices.