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 Migrants Caught in No-Man's Land In French Port

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching 'Fortress Europe' More

Video Westgate Mall Attack Survivors Confront Painful Memories

On anniversary of terror attack, survivors discuss how they have coped with trauma they experienced that day More

New Hints That Dark Matter Exists

New evidence from International Space Station hints at existence of dark matter and dark energy 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.
Migrants Caught in No-Man's Land Called Calaisi
X
Lisa Bryant
September 19, 2014 5:04 PM
The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Migrants Caught in No-Man's Land Called Calais

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Westgate Siege Anniversary Brings Back Painful Memories

One year after it happened, the survivors of the terror attack on Nairobi's Westgate Shopping Mall still cannot shake the images of that tragic incident. For VOA, Mohammed Yusuf tells the story of victims still waiting for the answer to the question 'how could this happen?'
Video

Video Militant Assault in Syria Displaces Thousands of Kurds

A major assault by Islamic State militants on Kurds in Syria has sent a wave of new refugees to the Turkish border, where they were stopped by Turkish border security. Turkey is already hosting about 700,000 Syrian refugees who fled the civil war between the government and the opposition. But the government in Ankara has a history of strained relations with Turkey's Kurdish minority. Zlatica Hoke reports Turkey is asking for international help.
Video

Video CERN Accelerator Back in Business

The long upgrade of the Large Hadron Collider is over. The scientific instrument responsible for the discovery of the Higgs boson -- the so-called "God particle" -- is being brought up to speed in time for this month's 60th anniversary of the European Organization for Nuclear Research, known by its French acronym CERN. Physicists hope the accelerator will help them uncover more secrets about the origins of the universe. VOA’s George Putic reports.
Video

Video Whaling Summit Votes to Uphold Ban on Japan Whale Hunt

The International Whaling Commission, meeting in Slovenia, has voted to uphold a court ruling banning Japan from hunting whales in the Antarctic Ocean. Conservationists hailed the ruling as a victory, but Tokyo says it will submit revised plans for a whale hunt in 2015. Henry Ridgwell reports from London.
Video

Video Russian Economy Reeling After New Western Sanctions

A new wave of Western sanctions is hitting Russia’s economy hard. State-owned energy firms continue to bleed profits and Russia’s national currency plunged to a new low this week after the U.S. and the European Union announced new sanctions to punish Russia's aggressive stance in eastern Ukraine. But as Mil Arcega reports, the sanctions could also prove costly for European and American companies.
Video

Video Belgian Researchers Discover Way to Block Cancer Metastasis

Cancer remains one of the deadliest diseases, despite many new methods to combat it. Modern medicine has treatments to prevent the growth of primary tumor cells. But most cancer deaths are caused by metastasis, the stage when primary tumor cells change and move to other parts of the body. A team of Belgian scientists says it has found a way to prevent that process. Zlatica Hoke has more.
Video

Video Mogadishu's Flood of Foreign Workers Leaves Somalis Out of Work

Unemployment and conflict has forced many young Somalians out of the country in search of a better life. But a newfound stability in the once-lawless nation has created hope — and jobs — which, some say, are too often being filled by foreigners. Abdulaziz Billow reports from Mogadishu.
Video

Video A Dinosaur Fit for Land and Water

Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Video

Video Iraqi Kurdistan Church Helps Christian Children Cope find shelter in churches in the Kurdish capital, Irbil

In the past six weeks, tens of thousands of Iraqi Christians have been forced to flee their homes by Islamic State militants and find shelter in churches in the Kurdish capital, Irbil. Despite U.S. airstrikes in the region, the prospect of people returning home is still very low and concerns are starting to grow over the impact this is having on the displaced youth. Sebastian Meyer reports from Irbil on how one church is coping.
Video

Video NASA Picks Boeing, SpaceX to Carry Astronauts Into Space

The U.S. space agency, NASA, has chosen Boeing and SpaceX companies to build the next generation of spacecraft that will carry U.S. astronauts to the International Space Station by the year 2017. The deal with private industry enables NASA to end its dependence on Russia to send space crews into low Earth orbit and back. Zlatica Hoke has more.
Video

Video Future of Ukrainian Former President's Estate Uncertain

More than six months after Ukraine's former President Viktor Yanukovych fled revolution to Russia, authorities have yet to gain control of his palatial estate. Protesters occupy the grounds and opened it to tourists but they are also refusing to turn it over to the state. VOA's Daniel Schearf reports from Mezhigirya, just north of Kyiv.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid

World Currencies

EUR
USD
0.7768
JPY
USD
108.84
GBP
USD
0.6124
CAD
USD
1.0999
INR
USD
61.042

Rates may not be current.