Turkey’s external deficit threatens TL meltdown
• Thanks to the new economy team of Cevdet Yilmaz, Mehmet Simsek and Gaye Erkan Turkey began a stabilization program based on fundamental principles of economics.
• Alas, the problems inherited from Erdogan’s reckless experiment with a voodoo economic model are so huge, progress towards stabilizing economic performance has lagged negative developments.
• Three problems gnaw the marrow of Turkish economy: Inflation, budget and current account deficits (External Deficit). This video focuses on the last.
• Turkey’s external deficit can’t be financed by foreign borrowing or financial capital inflows. Domestics are already switching to FX.
• The economy tram has until the end of October to fix the problem by cooling economic activity. Otherwise, Turkey will have another currency crisis this winter.
• Their job is complicated by a skeptical Erdogan looking over their shoulders.
• What can be done? What are the consequences of not being able to finance the external deficit?
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