Turkey’s Economy Is So Hot That It May Face A Meltdown


Can Publishing’s profits have dropped as the fall in the lira has forced the company to pay more for paper from Finland and glue from Germany. “Our margins have been cut dramatically,” Mr. Oz said.

Inside Istanbul’s Grand Bazaar, a labyrinth of shops selling jewelry, carpets and antiques, merchants complain that they must pay rent in dollars or euros even as they collect lira for their sales. Their rent is effectively going up while sales decline, in part because of a severe dip in tourism after a spate of terrorist attacks.


“The Turkish lira is like ice in hot weather,” said Zeki Uckardes, who sells cashmere, pashmina and silk scarves from a stall inside the bazaar. “The second you take it out, it starts to melt.”

The most vulnerable companies are those that have borrowed in foreign currencies.

Four years ago, Makro, a national chain of supermarkets, decided to pursue an aggressive expansion. It borrowed 200 million lira (then worth about $88 million) from seven Turkish banks, agreeing to interest rates of about 18 percent. In a bid to limit its debt burden, it borrowed an additional $12 million in the American currency, taking advantage of dollar loans at only 5 percent interest.

The company began opening new stores and hiring more workers. But by the middle of 2017, the lira had lost more than one-third its value and Turkish interest rates were climbing. The company’s monthly debt payments had risen by almost 50 percent, to 6 million lira. At the same time, Makro’s revenue plunged as discount grocery chains entered the market.

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Source : https://www.nytimes.com/2018/07/10/business/turkey-economy-erdogan.html

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