News / Economy

Corruption Probe Pummels Turkish Economy

People hold placards reading "Shame to thieves with Boxes" during a demostration on Dec. 29, 2013, in Istanbul against corruption and the government.
People hold placards reading "Shame to thieves with Boxes" during a demostration on Dec. 29, 2013, in Istanbul against corruption and the government.
Dorian Jones
Turkey's deepening political crisis between the government and judiciary over corruption allegations is impacting the country's stock market and currency. Concerns are growing about the financial and economic fall out.

The increasingly bitter struggle between the government and judiciary over a graft has pummeled Turkey's financial markets. The stock market has fallen nearly 20 percent while the Turkish lira has hit new lows.

Analyst Atilla Yesilada, of the Istanbul based political consulting firm Global Source Partners, says the full impact of the crisis will only be felt when financial markets return after the New Year's holiday period.

"In January or so, the world banking and investment community will return to their desks, trying to decide what to do with the Turkey conundrum. Unless there is a breakthrough in this crisis, I anticipate a lot of macro funds would sell," he said. "We don’t see a way out, How is it going to end? I mean nobody can speculate a decent scenario."

Turkey's graft inquiry is one of the largest judicial probes into government corruption in the country.

Turkish Prime Minister Tayyip Erdogan has said the probe is part of a conspiracy to bring down his government. Chief economist Inan Demir of the Istanbul based Finans Bank says the political crisis could not come at a worse time.

"The investors were already concerned about Turkey’s external financing situation in a world where interest rates will not be as low as before and the increased political risk actually compounded these problems," Demir said. "It appears as though one of Turkey's most important assets during the past ten years, which was the political stable market friendly government. cannot be taken for granted, to say the least."

Observers warn a change in international sentiments towards Turkey is likely to add to growing pressure on the Turkish lira, which is already at record lows. Analyst Yesilada warns that could hurt the Turkish economy as many companies have borrowed in foreign currencies.

"Their financing expenses in terms of dollars and euros is going to jump because of the devaluation of the lira," he said. "There will be a massive squeeze on cash flow some companies could go under. The economic implications are exponential. There will become more dire as this crisis goes on."

The more than decade-long rule of the AK Party has been a time of unprecedented economic growth with Turkey's gross domestic product tripling.

But economist Demir warns those days may now be over.

"The government has benefited tremendously from the strong growth performance over the past ten years," said Demir. "A slow down in growth is something that governments can ill afford, that is particularly the case in an election year. So we could see the government loosening the fiscal purse strings to some extent going forward, that could also contribute to the negative perceptions of investors."

Observers say the state of the economy could be just as decisive to the future of the government as its legal battles. March sees local elections, which the prime minister is expected to try to turn into a referendum on his government. Presidential elections are scheduled for 2014. and Erdogan is expected to run.

You May Like

Video Miami Cubans Divided on New US Policy

While older, more conservative Cuban Americans have promoted anti-Castro political movement for years, younger generations say economically, it is time for change More

2014 Sees Dramatic Uptick in Boko Haram Abductions

Militants suspected in latest mass kidnapping of over 100 people in Gumsuri, Nigeria on Sunday More

Video Cuba Deal Is Major Victory for Pope

Role of Francis hailed throughout US, Latin America - though some Cuban-American Catholics have mixed feelings More

This forum has been closed.
Comment Sorting
Comments
     
by: Osman from: Turkey
December 30, 2013 4:11 PM
I really wonder what kind of goverment can both corrupte and develope its country.what happens in Turkey definitely can not be corruption of goverment.considering what the goverment has been doing in terms of developement for last decade, even If a little kid can realise this is a defamation of marginal fat cat group leaders, . There is no goverment in Turkey's history like current one.Our prime minister and his team are capable of even taking america further than the place that Obama took US up. So this can even be one of the reasons behind of all what happens today.


by: Ozlam from: Turkey
December 30, 2013 12:51 PM
Islam has corrupted Turkey to its core. we have become allies with Iran... IRAN!!! Iranians - the filthiest people on the planet. Erdogan has corrupted and killed our proud military... the guardians of our freedoms. I really begin to believe that Satan reveals himself in hatred to Israel. and Satan rules Turkey today...

In Response

by: to "Yavuz" from: Corpus C
December 30, 2013 7:59 PM
Nobody can say that Turkey belongs to Islams. That's not true! You can't ignore non-Muslim "people". YES!! They are people, too. I know most of Muslims think that non-Muslims would go to hell after they pass away.

So after stealing that much money and put in jail many innocent people he'll go to Heaven because he is Muslim??? NO WAY!

In Response

by: Yavuz from: Turkey
December 30, 2013 4:52 PM
Someone who does not like Islam can leave immediately because Turkey belongs to Muslims and it will never change.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Sudan School Becomes Target of Aerial Attacksi
X
December 19, 2014 12:45 AM
The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video VOA Reporter Tours Devastated Peshawar School

Islamist militants wearing military uniforms and strapped with explosives attacked a military run school Tuesday in the northwestern Pakistani city of Peshawar. At least 141 people were killed in the horrific attack, most of them young students. VOA reporter Ayaz Gul visited the devastated school and attended the funeral of the principal who courageously tried to save her students from the deadly attack.
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Putin Says Russian Economy Will Emerge Stronger

Russian President Vladimir Putin has said his country's sinking economy will not only recover but also become stronger, despite falling oil prices and Western sanctions over Ukraine. VOA's Daniel Schearf reports.
Video

Video Detained Turkish Journalists Follow Teachings of US-Based Preacher

The Turkish government’s jailing of critical journalists has sparked international condemnation and is being seen as an effort to undermine the followers of an ailing Turkish preacher based in the United States. VOA religion reporter Jerome Socolovsky has more.
Video

Video ‘Anti-Islamization’ Marches Increase Tensions In Germany

Anti-immigrant rallies in Germany have been building in recent weeks, peaking Monday night in the city of Dresden where tens of thousands of people turned out to demonstrate against what they call the ‘Islamization’ of the West. Germany has offered asylum to more Syrian refugees than any other country, and this appears to have set off the protests. Henry Ridgwell reports from London.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.
Video

Video Refugees Living in Kenya Long for Peace in the Home Countries

Kenya is host to numerous refugees seeking safe haven from conflict. Immigrants from Somalia face challenges in their new lives in Kenya. Ahead of International Migrants Day (December 18) Lenny Ruvaga has more for VOA News from the Kenyan capital.

All About America

AppleAndroid

World Currencies

EUR
USD
0.8143
JPY
USD
119.23
GBP
USD
0.6390
CAD
USD
1.1596
INR
USD
63.304

Rates may not be current.