Euro plunge hurts Turkish economy
The continued plunge of the euro is hurting the Turkish economy amid its ambitious anti-inflation program, analysts say.
The relative strength of the U.S. dollar's value is boosting the prices of raw materials that Turkey imports, while the sliding euro is lowering the monetary value of Turkey's exports, they said.
The European Union is Turkey's primary market and buys more than half of its exports. The euro's impact, combined with the surge in oil prices, damage Turkey's trade balance and trigger inflation, as government spokesman have also indicated.
Turkey's imports rose by 36 percent in the first half of the year to $25 billion, while exports were up by a meager 4.5 percent to $13.4 billion. As a result, the trade deficit widened 107.5 percent to $11.7 billion.
Tunca Toskay, the economy minister, blamed oil prices and the euro for a slower-than-expected fall in inflation.
Under a three-year deal with the IMF, the government had hoped to curb wholesale inflation to 20 percent by the end of the year. But the eight-month inflation rate climbed to 20.9 percent.
Analysts were concerned about private manufacturing price increases, dubbed core inflation, which stubbornly remained above the monthly lira depreciation rate. Higher core inflation was seen partly as a result of rising raw material costs.
Month-on-month core inflation was 1.7 percent in August, slightly down from 1.9 percent in July, versus a lira depreciation of 1.3 percent against 1 U.S. dollar plus 0.77 euro.—(Albawaba-MEBG)
© 2000 Mena Report (www.menareport.com)