An absolute testimony to the resilience and incredible work ethic of the population of Turkey is the resounding commitment that the country’s highly diversified industry sectors have continued to operate at full capacity and, to some extent, even more so than in other developed economies.
This commitment to keeping business going, in the form of welcoming tourists from every nation in the world, continuing to export engineering equipment, electronic goods, cars, clothing and foodstuffs whilst very diplomatically not participating in any geopolitical betes noires such as lockdowns or sanctions.
Turkey is, and always has been, absolutely open for business for everyone.
All of this laudable work ethic continues against a tough backdrop of a now five-year-long crisis involving the continually depreciating value of the Turkish Lira, one of the most popularly traded exotic currencies throughout the last two decades.
Inflation in Turkey reached an astonishing 70% last year and is now standing at approximately 55%, which is still incredibly high.
Now, as we begin the month of April, the Turkish population is preparing for the nation’s General Election, which is only a few weeks away and set to take place on May 14.
Current President Recep Tayyip Erdogan, who has been President since 2014, is running again for election, and whilst he has been quite popular over the past ten years, his economic policy, which has caused tremendous struggle among individuals and businesses alike, has worn the voter base thin.
Therefore, it could go either way; however, the Turkish Lira has not begun to make its way back down from the seemingly endless depreciation in its value.
Today, the British Pound, US Dollar and Euro all made more gains against the troubled Lira, which demonstrates investor confidence that is looking at the Erdogan years, which have, for over 50% of the time in which Erdogan has been in office, been times of catastrophic freefall for the Lira.
The bright news is that in 2023, Turkey, which is the world’s tenth largest economy, is set to become an economic powerhouse with an economy worth approximately $2 trillion, a per-capita annual income of $25,000 which is far higher than when Erdogan came to office and is almost up to Western standards, and an export market which provides Turkey with a $500 billion revenue from selling its products overseas.
Those are substantial figures for a hard-working nation.
Today, the British Pound is trading at 23.99 Lira to the Pound, which is a significant rise for the Pound over yesterday, when at the beginning of the trading day, the Lira was trading at 23.57 against the Pound.
There is an air of optimism in Turkey, and with voter behaviour shaped by political loyalty and other cultural values rather than purely monetary policy, it appears that investors consider the upcoming election as a relative non-issue and are looking at the Lira’s value through the same eyes as the past five years.
Thus, it may be that in the run-up to the election, there could be some ‘business as usual’ dynamics as it will clearly be difficult to imagine that Erdogan would be replaced by an opponent. However, if that does happen, and today there are analysts who believe there is a 50% chance of that happening, the Lira may respond with volatility.
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