In an interview with CNBC this week, Finance Minister Mehmet Sinsek indicated the Turkish economy would be able to navigate current economic difficulties with a so-called 'soft-landing.'
While concerns over Europe linger, other macroeconomic factors could benefit the Turkish economy ( TUR , quote ) going forward.
The Turkish economy has not fared particularly well over the past few months as a result of its substantial exposure to European markets.
Forty percent of Turkey's exports head to Europe and a lot of its short-term financing comes from European lenders. As a result, investors have fled the Turkish ETF in order to avoid further potential downside.
However, by only evaluating the European aspect of the Turkish economy, investors are potentially missing out on green shoots that could be indicative of a recovering Turkish economy.
Ratings agencies have long fretted over Turkey's gaping current account deficit. At 10% of GDP, it was the largest of any G-20 country.
However, a global slowdown and effective policy could eventually remedy this structural impediment.
BecauseTurkey is a net importer of fuel , high oil prices exacerbate the country's current account deficit. Conversely, declining oil prices help ameliorate the country's trade gap.
If a global slowdown continues and crude prices keep heading lower, the underlying strength of the Turkish economy could improve.
During the Turkish economy's recent boom years, inflationary pressures soared. But measures implemented by the Turkish government to rein in inflation are proving effective thus far, with inflation decreasing from 11.5% in April to 8.3% in May.
The resulting stronger lira would also make oil imports even cheaper, potentially providing a further boost to Turkey's current account situation.
The crisis in Europe will continue to pressure the Turkish ETF until a resolution is achieved.
But the Turkish government appears to be making the right decisions to ensure the country returns to sustainable growth in the medium-term, while avoiding the pernicious boom-bust cycles that have plagued many emerging markets.
Investors with a long-term time horizon could consider starting a small position in TUR here.
nasdaq.com
While concerns over Europe linger, other macroeconomic factors could benefit the Turkish economy ( TUR , quote ) going forward.
The Turkish economy has not fared particularly well over the past few months as a result of its substantial exposure to European markets.
Forty percent of Turkey's exports head to Europe and a lot of its short-term financing comes from European lenders. As a result, investors have fled the Turkish ETF in order to avoid further potential downside.
However, by only evaluating the European aspect of the Turkish economy, investors are potentially missing out on green shoots that could be indicative of a recovering Turkish economy.
Ratings agencies have long fretted over Turkey's gaping current account deficit. At 10% of GDP, it was the largest of any G-20 country.
However, a global slowdown and effective policy could eventually remedy this structural impediment.
BecauseTurkey is a net importer of fuel , high oil prices exacerbate the country's current account deficit. Conversely, declining oil prices help ameliorate the country's trade gap.
If a global slowdown continues and crude prices keep heading lower, the underlying strength of the Turkish economy could improve.
During the Turkish economy's recent boom years, inflationary pressures soared. But measures implemented by the Turkish government to rein in inflation are proving effective thus far, with inflation decreasing from 11.5% in April to 8.3% in May.
The resulting stronger lira would also make oil imports even cheaper, potentially providing a further boost to Turkey's current account situation.
The crisis in Europe will continue to pressure the Turkish ETF until a resolution is achieved.
But the Turkish government appears to be making the right decisions to ensure the country returns to sustainable growth in the medium-term, while avoiding the pernicious boom-bust cycles that have plagued many emerging markets.
Investors with a long-term time horizon could consider starting a small position in TUR here.
nasdaq.com
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