Trump trade tariffs and higher borrowing costs are causing problems from Turkey to China
Donald Trump’s trade tariffs are causing tremors in global markets. Emerging economies from Turkey to China are finding it more expensive to export to the US. Investors who put their money in safe havens after the 2012 Greek crisis are nervous again. The FTSE Emerging Index of stocks in the developing world tumbled last week, taking the decline in its value since the beginning of the year to more than 20%.
By rejecting the conventional approach, Erdoğan risks greater trouble – and not just for Turkey
Whether by accident or design, Turkey is trying to rewrite the chapter on crisis management in the emerging-market playbook. Rather than opting for interest-rate hikes and an external funding anchor to support domestic policy adjustments, the government has adopted a mix of less direct and more partial measures – and this at a time when Turkey is in the midst of an escalating tariff tit-for-tat with the US, as well as operating in a more fluid global economy. How all this plays out is important not only for Turkey, but also for other emerging economies that already have had to cope with waves of financial contagion.
Turkish currency falls 5% at the end of a tumultuous week; European stocks drop after Turkish court rejects US pastor’s appeal for release
The Turkish lira has taken another battering today, falling 5% to 6.1 to the dollar (it lost nearly 7% at one stage) and the Turkish stock market is down 1%.