Alarm bells over Turkey’s economic bind ‘akin to those of 1997 Asian debt crisis’

Alarm bells over Turkey’s economic bind ‘akin to those of 1997 Asian debt crisis’
Analysts say Turkey's President Erdogan has called early elections with one eye on a brewing economic crisis that, if all goes to plan, won't hit voters until some time after the ballots are counted. The president says Turkey's growth story will continue to surprise the critics.
By bne IntelliNews April 20, 2018

Turkey’s economic predicament is starting to ring alarm bells akin to those seen in the Asian debt crisis of 1997, a London-based fund manager was on April 20 reported as saying.

As investors continued to fret that Turkey’s warp-speed economic expansion, running at a faster pace than growth in India and China, could end in an economic meltdown, Paul McNamara, a London-based fund manager who oversees about $11bn in emerging-market investments at GAM UK, told Bloomberg: “Turkey is ticking all the boxes: large FX debt on corporates, current-account deficit, reserves shrinking. We think foreign investors are being complacent." While banks aren’t yet seeing problems rolling over their foreign loans, “if it happens, it will happen very fast and that’s very critical," he added.

Turkish policy makers, urged on by the unorthodox stance of President Recep Tayyip Erdogan who has pushed for interest rate cuts despite pronounced market pressure for the opposite move, have pursued a growth-at-all costs agenda. With the markets wondering if the Turkish central bank might hit the brakes with some tightening at its upcoming April 25 monetary policy committee (MPC) meeting (the question has become more intriguing following the April 18 announcement that snap parliamentary and presidential elections are to take place on June 24), some investors are switching their focus to a side effect of the breakneck growth, namely deteriorating foreign debt balances.