The economy of Turkey's neighbor Iraq crisis proceeding

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The economy of Turkey's neighbor Iraq crisis proceeding

اقتصاد تركيا يكتوي بأزمة الجار العراقي

News source:

Ali Salman

June 23, 2014 12: 41 pm

Analysts say the fighting in Iraq may slow the gradual process by which Turkey seeks to restore balance to the economy.

High oil prices could raise inflation and the collapse of major export market will impose pressure on Turkey's efforts to reduce the deficit in the balance of current transactions Fylde.

And contributed to the decline in the pound and higher interest rates to calm domestic demand and export support in recent months. This in turn reduced the deficit of current transactions representing the main weakness in the Turkish economy and help restore balance to the economy in the wake of significant growth in credit was the basis for verification.

But the kidnapper to progress in Iraq Islamic militants threatens to dismember the second largest export market for Turkish products and a leading supplier of oil to Turkey.

Oil prices have risen to their highest level for nine months, surpassing the $ 115 a barrel on Friday due to fears that heavy fighting reduced oil supplies from Iraq.

Turkey buys 90 percent of the crude oil it needs from abroad contributed to raise the deficit in the balance of current transactions to $ 65 billion in 2013.

Economists estimate that every rise in the price of oil by $ 10 lead to high inflation in Turkey by 0.5 percent and increase the current deficit by four billion dollars.

He tips the the head of emerging markets strategy at Societe Generale in a note to clients last week, "it is clear that Turkey is geographically on the front line as well as from the perspective of the balance of payments."

"In my opinion the price of oil became the main risk index for emerging markets," adding that the World Bank decided to sell the Turkish lira to hedge political risk rising. "

He said the Minister of finance Mehmet şimşek this month that he expected energy import bill amounted to $ 61 billion in 2014, compared with $ 56 billion last year.

On Tuesday acknowledged that the developments in Iraq may slow the progress made by Turkey in the narrowing gap in the balance of current transactions this year.

The deficit fell to 16.37 billion dollars in the first four months of this year and slightly less than $ 57 billion in the 12 months until the end of April.

Oil inflation

As an inflationary impact of rising oil prices is problematic for the Central Bank, which meets Thursday to set interest rates.

And last Monday, said Central Bank Governor Erdem bashagi that the Bank may cut interest rates soon, perhaps next week if satisfied that inflation expectations have improved significantly.

But economists questioned whether this is the current situation.

The annual inflation rate reached 9.66 percent in may, while the Central Bank has forecast year-end 7.6 percent compared with the target level in the medium term it is five percent.

The Bank has repeatedly said it expected inflation to decline from June.

William Jackson said economic capital economics in London, "recent developments will increase the difficulty of reducing the high inflation and reduce deficits in the balance of current transactions."

"It seems difficult to justify any further cuts in interest rates. If the Central Bank lowers the interest, the lira has become more vulnerable to a huge wave of selling. "

The lira fell 3.5 percent in the last two weeks and the performance of other emerging markets currencies better off them after investors started worrying developments in the violence in Iraq.

Jackson expected the currency by the end of the year to 2.25 pounds to the dollar from about 2.1 pounds now. A Reuters survey predicted the decline of the Turkish currency slightly to 2.22 pounds against the dollar in 12 months.

Last month the Central Bank cut the interest for the first time since the year despite rising inflation after calls from Prime Minister Tayyip Erdogan calling for such a move in order to maintain growth before presidential elections in August and is expected to run.

A survey conducted by Reuters showed the views of 20 economically they expect Central Bank announced a reduction of half a percentage point of the repurchase price for the week during Tuesday's meeting.

http://burathanews.com/news/240243.html

[haymon]

Great, there goes my stock in Rupee.

[sandfly]

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