At the time of the general election in Turkey, I pointed out that Turkey was near the top of the pile for a debt and currency crisis. It was running a massive current account (trade and payments) deficit with other countries and its external debt (what it owes to other countries in credits) was over 50% of its annual output (GDP), the highest among major ‘emerging economies’, while it foreign exchange reserves to cover repayments and support the value of the currency, the Turkish lira, were just 12% of GDP. The country was now being run a self-aggrandising autocrat in (what we now call) “Trump-style”, and who was refusing to allow the main monetary authority, the Central Bank of Turkey, to impose higher interest rates in order to ‘curb’ inflation and attract ‘hot money’ from foreigners; or to implement any fiscal austerity, orthodox capitalist style.
The only escape valve was…
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