Turkey on the Economic Brink, Explained in a Dozen Charts

Andrew Brunson an American pastor is released to home detention last month in Izmir Turkey

Andrew Brunson an American pastor is released to home detention last month in Izmir Turkey

Turkish President Tayyip Erdogan has dismissed concerns over the tumbling lira, calling on Turks to "have no worries", after the currency hit record lows in recent weeks on the back of a widening rift with the United States.

Turkish President Recep Tayyip Erdogan has brushed off the plunging value of the lira and a rift with the USA, telling Turks: "If they have their dollars, we have our people, our God". Markets are deeply concerned over the direction of economic policy in Turkey where inflation has hit almost 16 percent while the central bank remains reluctant to raise rates in response.

"There are several campaigns being carried out [against Turkey]".

Ankara is turning towards China to overcome what Erdogan said were "subjective evaluations" from ratings agencies.

"Don't forget, if they have their dollars, we have our people, our God". We are working hard.

"We are entering into a balance-of-payment crisis here", said Cristian Maggio, head of emerging market strategy at TD Securities in London.

Berat Albayrak, the Treasury minister and Mr Erdogan's son-in-law, is due to announce a "new economic model" for Turkey...

The Turkish economy has expanded rapidly this year compared with 2017.

"In any case, sanctions on the Turkish banking sector would be catastrophic as Turkey is dependent on capital inflows to finance its high current account deficit".

Investors are now awaiting the release of USA consumer price inflation data for July for clues on the interest rate outlook and to gauge if new import tariffs were starting to have an impact. The currency has lost 30 per cent of its value this year, most of that since Mr Erdogan retook office with hugely expanded powers a month ago. Erdogan said China, Mexico, Russia and India will be new markets for his country's exports. "Selling more elsewhere would offset some of the hypothetical decline in eurozone exports to Turkey". Once any crisis was over, the bank expects exports to recover quickly.

Korkut Boratav is more concerned and thinks an intervention by the International Monetary Fund is the only way to save the European banks. "This is one of the most important principles of the free market economy - if you lend money, you take a risk and must accept the losses".