Turkey sees an opportunity to outperform other emerging markets affected by the tariff war initiated by Trump ‘once the dust settles’, thanks to lower commercial exposure to the US market and the collapse of oil prices, said Turkish Finance Minister Mehmet Şimşek, who believes that the drop in oil prices will reduce the deficit in Turkey caused by energy imports, helping the Eurasian country to recover its foreign exchange reserves.
In statements made by Şimşek to the Financial Times and reported by the Turkish press, the minister pointed out that the 1.3 trillion dollars economy of Turkey is relatively isolated from the turbulence caused by the imposition of tariffs, given that 80% of Turkey’s trade is carried out with markets with which Ankara has a Free Trade Agreement, such as the EU, or with ‘friendly neighbours’ in the Middle East, Central Asia and North Africa, he stressed.
Although Trump maintains good relations with Turkey and its president, Tayyip Erdoğan, something Trump himself emphasised yesterday in his appearance with Netanyahu at the White House, the US president decided to impose basic customs tariffs on Turkey of 10%, something that Turkish Trade Minister Ömer Bolat has described as ‘the lesser of two evils’.
‘When the dust settles, we are confident and believe that Turkey could stand out positively in the eyes of investors, compared to the more problematic emerging economies in Asia and elsewhere,’ said Şimşek. “There has been a large but brief impact caused by internal political turbulence (following the protests in Turkey). Now (the turbulence) is driven by tariffs,” he added.
‘In relative terms, our vulnerability (to the tariffs imposed by Trump) is not so bad. We may have to live with more moderate growth. But the fact is this: we have to live with external shocks like these,’ said Şimşek, who nevertheless acknowledged that a slower-growing Turkish economy will mean a decline in tax revenues for Turkey, which “could lead to a larger budget deficit” than expected. ‘We will maintain spending discipline regardless. Big picture, we can live with this,’ he concluded.
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Edited and reviewed by:
Pablo Gómez is a specialist in Turkey and has been editor-in-chief of Hispanatolia since 2011. He has been analysing current affairs and geopolitics in Turkey and the surrounding region since 2006.
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