“If there are dollars under your pillow, take these out. If there are euros, take these out .. Immediately give these to the banks and convert to Turkish lira," Mr Erodgan said on Saturday. Ismail Ferdous/Bloomberg
“If there are dollars under your pillow, take these out. If there are euros, take these out .. Immediately give these to the banks and convert to Turkish lira," Mr Erodgan said on Saturday. Ismail FerShow more

Turkey faces tough choices as it teeters on brink of economic collapse



Turkey's government faces politically unsavoury measures to pull the country back from the brink of economic collapse amid risks of contagion by European banks and emerging markets.

Gripped by one of the worst currency routs in emerging market history, Turkey's economic pain could spread beyond its banking system to import-reliant sectors and heighten the risk of exposure of European lenders, particularly Spanish and Italian ones, to the crisis, analysts said. Taking a cue from countries that suffered currency collapse, Turkey's options include tighter monetary policy and a rescue package from the International Monetary Fund--both unappealing to policymakers.

"International investors would like to see the same actions taken in Argentina recently: much higher interest rates, [and] a commitment to address inflation, improve fiscal performance and engage with multi-lateral lenders like the IMF," Hasnain Malik, equity strategist at Exotix Capital, said.

The Turkish lira sank to its lowest levels since 2001, roiling global markets on Friday, as tensions flared between Nato allies Turkey and the United States over Ankara's imprisonment of an American pastor.

On Friday, US President Donald Trump doubled tariffs on Turkish metal imports.

Retorting to Mr Trump's move, Turkish President Recep Tayyip Erdogan urged the country's citizens on Saturday to support the lira, to win a "war of independence".

“If there are dollars under your pillow, take these out. If there are euros, take these out. Immediately give these to the banks and convert to Turkish lira and by doing this, we fight this war of independence and the future. Because this is the language they understand,” he said.

_______________

Read more:

Trump hits Turkey with doubled tariffs as lira tumbles

Turkey talks banking and Brunson in 'ongoing' US talks

Trump's targeting of Turkey spells danger for its economy

_______________

If Turkey fails to take decisive measures, it will face a significant risk of a banking crisis, as both government and corporate borrowers rely heavily on foreign debt, analysts said. 

"The longer this crisis goes on without a serious policy response, the higher the odds of a banking crisis.  At the very least, I expect some individual banks will fail," said Win Thin, a strategist at Brown Brothers Harriman & Company in New York . "I would assume that the government would step in to take over banks that are too big to fail. Either way, lots of pain ahead in the banking sector." 

The financial turmoil is showing signs of a spillover into the rest of the economy. The falling currency will make imports more expensive and stoke inflation. 

"The sectors that will suffer the most are those which rely on imports," said Ghanem Nuseibeh, founder and director of Cornerstone Global based in London.

“This includes in particular the energy sector, but also construction.”

This creates a problem for Turkey. It is heavily reliant on importing oil, which is priced in dollars, a currency that has been rising this year while the lira weakens. 

Turkey will need to implement a number of measures to stem its financial meltdown, "none of which will be easy to deliver politically" and "none will be easy to sell economically," Mr Nuseibeh said.

An aggressive interest rate rise by the central bank of at least 10 percentage points is a minimum start, analysts said.

However Mr Erdogan, who has described interest rates as the “mother and father of all evil”, has been traditionally set against the move. 

Economists say the central bank needs a hefty increase in rates for an extended period to tackle inflation and to shed the perception that it lacks
independence. 

Turkey needs to improve international relations with the European Union and the US to ease tensions with the West and calm markets, they said. “If Turkey could fulfil these conditions, then the IMF might consider giving Turkey a programme but, to me, I doubt Erdogan will do this except as a last resort,” Mr Thin said. 

"The lesson from other countries that have suffered from currency crises is that fiscal and monetary policy will need to tighten, preferably under the auspices of an IMF deal, to stabilise the economy," according to an August 8 report by Capital Economics.

“Our concern is that there is little appetite within the Turkish government or central bank to tighten policy, let alone turn to the IMF for support.” 

Turkish policymakers will try to “muddle through for as long as possible,” resulting in higher inflation and a weaker lira, the report said. 

The alternative measures of capital controls, blaming foreign powers for the crisis and sticking to the pursuit of high growth via “unjustifiably low” interest rates will deepen the crisis, Mr Malik said.

If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.

When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.

How to get there: Emirates currently flies from Dubai to Orlando five times a week.
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
 
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
COMPANY%20PROFILE%20
%3Cp%3E%3Cstrong%3ECompany%20name%3A%20%3C%2Fstrong%3EAlmouneer%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202017%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Dr%20Noha%20Khater%20and%20Rania%20Kadry%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EEgypt%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%20%3C%2Fstrong%3E120%3Cbr%3E%3Cstrong%3EInvestment%3A%20%3C%2Fstrong%3EBootstrapped%2C%20with%20support%20from%20Insead%20and%20Egyptian%20government%2C%20seed%20round%20of%20%3Cbr%3E%243.6%20million%20led%20by%20Global%20Ventures%3Cbr%3E%3C%2Fp%3E%0A
Game Changer

Director: Shankar 

Stars: Ram Charan, Kiara Advani, Anjali, S J Suryah, Jayaram

Rating: 2/5

%20Ramez%20Gab%20Min%20El%20Akher
%3Cp%3E%3Cstrong%3ECreator%3A%3C%2Fstrong%3E%20Ramez%20Galal%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%3C%2Fstrong%3E%20Ramez%20Galal%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStreaming%20on%3A%20%3C%2Fstrong%3EMBC%20Shahid%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E2.5%2F5%3C%2Fp%3E%0A
MATCH INFO

France 3
Umtiti (8'), Griezmann (29' pen), Dembele (63')

Italy 1
Bonucci (36')

Living in...

This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.

Lewis Hamilton in 2018

Australia 2nd; Bahrain 3rd; China 4th; Azerbaijan 1st; Spain 1st; Monaco 3rd; Canada 5th; France 1st; Austria DNF; Britain 2nd; Germany 1st; Hungary 1st; Belgium 2nd; Italy 1st; Singapore 1st; Russia 1st; Japan 1st; United States 3rd; Mexico 4th

COMPANY PROFILE
Name: HyperSpace
 
Started: 2020
 
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
 
Based: Dubai, UAE
 
Sector: Entertainment 
 
Number of staff: 210 
 
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Where can I submit a sample?

Volunteers can now submit DNA samples at a number of centres across Abu Dhabi. The programme is open to all ages.

Collection centres in Abu Dhabi include:

  • Abu Dhabi National Exhibition Centre (ADNEC)
  • Biogenix Labs in Masdar City
  • Al Towayya in Al Ain
  • NMC Royal Hospital in Khalifa City
  • Bareen International Hospital
  • NMC Specialty Hospital, Al Ain
  • NMC Royal Medical Centre - Abu Dhabi
  • NMC Royal Women’s Hospital.
The%20Color%20Purple
%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3EBlitz%20Bazawule%3Cbr%3E%3Cstrong%3EStarring%3A%20%3C%2Fstrong%3EFantasia%20Barrino%2C%20Taraji%20P%20Henson%2C%20Danielle%20Brooks%2C%20Colman%20Domingo%3Cbr%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
Napoleon
%3Cp%3E%3Cstrong%3EDirector%3C%2Fstrong%3E%3A%20Ridley%20Scott%3Cbr%3E%3Cstrong%3EStars%3C%2Fstrong%3E%3A%20Joaquin%20Phoenix%2C%20Vanessa%20Kirby%2C%20Tahar%20Rahim%3Cbr%3E%3Cstrong%3ERating%3C%2Fstrong%3E%3A%202%2F5%3Cbr%3E%3Cbr%3E%3C%2Fp%3E%0A
Cultural fiesta

What: The Al Burda Festival
When: November 14 (from 10am)
Where: Warehouse421,  Abu Dhabi
The Al Burda Festival is a celebration of Islamic art and culture, featuring talks, performances and exhibitions. Organised by the Ministry of Culture and Knowledge Development, this one-day event opens with a session on the future of Islamic art. With this in mind, it is followed by a number of workshops and “masterclass” sessions in everything from calligraphy and typography to geometry and the origins of Islamic design. There will also be discussions on subjects including ‘Who is the Audience for Islamic Art?’ and ‘New Markets for Islamic Design.’ A live performance from Kuwaiti guitarist Yousif Yaseen should be one of the highlights of the day.