0121 GMT October 24, 2019
The latest failed coup in Turkey will entail economic consequences for the Eurasian country.
As soon as the coup was launched, the lira plummeted by five percent. This was the biggest fall in the last eight years.
The fall in Turkey's currency can fuel inflation and strike a blow to the country's stock market. Besides, political uncertainty will further heighten investors’ concerns.
Unless the government manages to reinstall security in the wake of the failed coup, the depreciation in lira may continue and undermine the economy.
Turkey’s economy has been reeling from the dire consequences of bomb attacks over the past months which have claimed dozens of lives.
The main victim of such raids has been the country’s tourism industry. The Turkish government says tourism declined by over 20 percent in May.
The adverse impacts of the attempted coup will further deepen the ongoing crisis in the tourism industry.
Besides, Ankara’s strained ties with Moscow over the shooting down of a Russian jet along the Syrian border last year has exacerbated woes in the sector. The fall in tourism industry has pushed the Erdogan government to reconcile with Russia.
Nonetheless, political instability jeopardizes potential gains to tourism.
Turkey had been one of the world’s best-performing emerging markets. But growth was already forecast to slow from 4.5 percent in 2015 to between three and four percent in 2016.
Turkey is heavily dependent on relatively short-term foreign capital inflows as it is burdened with a high current account deficit. This comes as many companies across Turkey have significant levels of debt.
Nowadays, Turkey needs to reinstate security to compensate for economic losses inflicted on the country. Ankara had better, in the first step, make efforts to weather political instability. Undoubtedly, terrorist attacks rooted in Turkey’s intrusive policy in Syria, have provoked the ongoing political instability. Hence, the Turkish government needs to reverse it hostile policy against the Syrian government. If materialized, this will pave the ground for overcoming other conflicts which have battered Turkey’s economy.
It is clear that psychological impacts of the ongoing conflicts in Turkey will not vanish into thin air in short-term. But Ankara should know that “the journey of a thousand miles begins with one step”.