Article / 04 August 2016 at 12:29 GMT

This is what data say amid the Turkish turmoil

  • OECD predicted 'challenging times' for Turkey on day of attempted putsch
  • Standard & Poor's later downgraded Turkey with a negative outlook
  • Turkish economist Gürsel thinks S&P reacted too strongly, too quickly
  • Turkish lira, stocks fell heavily after the incursion
Anti Erdogan protests in Strasbourg
In October 2015, anti-Erdogan protests took place in Strasbourg, ahead of the Turkish president's visit. "Your are not our President," reads the poster in the middle. Photo: iStock
By Clemens Bomsdorf

Following the failed Turkish coup d’état, ratings agency Standard and Poor's has downgraded the Republic of Turkey, sending it further into junk status. Amid the harsh action against critics and the apparent instability of the country, other economists as well as politicians have expressed doubts over the republic's prospects.

Turkish officials, however, disagree. 

Here are some of the key figures involved with the Turkish economy and the recent developments afoot in the country, post-coup attempt.

OECD overview of Turkish key indicators (click to enlarge):
OECD on Turkey
Source: OECD

The full headline reads: “Turkey: challenging times call for pushing ahead with economic reform.” 

The OECD stresses the country's impressive track record of growth and “encourages Turkey to continue pursuing prudent macroeconomic policies aimed at bringing down inflation, increasing domestic savings, improving women’s participation in the labour force, and boosting foreign direct investment.” 

(The latter might become an increasingly prominent issue after the recent turmoil.)

The Republic of Turkey and its president (and former prime minister) Recep Tayyip Erdoğan have been in the news for quite a while now. The refugee crisis, disputes with a German comedian, and most recently the failed coup mean there has been much more focus on the Eurasian country than is the norm.

The Economist on Turkey in 2002 (collage of website and magazine title):
The Economist
Source: The Economist 

When Erdoğan came into power as head of government in 2003, the chances for his country to become a EU member were not only not bad, but also increasing. The year before he resumed office, The Economist – Europe’s leading weekly liberal publication – had argued that 'Turkey belongs in Europe'

Times are different now. With Erdoğan shutting down media, arresting thousands of critics and potential critics, and thinking loudly of reintroducing the death penalty, he now has a difficult path ahead of him in Europe

Only days after the July 15 coup attempt against Erdoğan, which failed and was subsequently used to further restrict freedom of expression and movement, ratings agency Standard & Poors said it expects “a period of heightened unpredictability that could constrain capital inflows into Turkey’s externally leveraged economy.”  

S&P added that “Turkey’s economic, fiscal, and debt metrics could deteriorate beyond what we expect, if political uncertainty contributed to further weakening in the investment environment, potentially intensifying balance-of-payment pressures.”

Economist Seyfettin Gürsel, speaking in an interview with German daily newspaper Frankfurter Allgemeine,  said S&P's decision took him by surprise and is unjustified. While he is afraid that foreign investors will withdraw more money from Turkey, he underlines that the country's fiscal situation with its low deficit (39% of GDP according to OECD, just above 30% according to Gürsel) is in a relatively good position.

Turkish minister of trade Bülent Tüfenkci said the coup attempt has cost the Turkish economy 300 billion Turkish lira (around $100 billion), according to Turkey's daily Hürryet. He sees it as a sign of strength that markets opened on Monday after the Friday putsch attempt.

The Turkish lira (USDTRY) and the local stock market reacted negatively to the recent political turmoil, of course. But one can also clearly see from the longer-term charts below that the local stock market as well as the country's currency had been under pressure and volatile for some time. 

(For more on Turkey, take a look at the discussion in the July 21 mid-Session update; Saxo chief economist Steen Jakobsen on the coup's possible effect on emerging markets; an earlier piece by Peter Garnry on Turkish equities or John Hardy on the immediate FX impact of the coup attempt.)

Turkey ETF ITKY:xams EUR since April 2016 (daily chart, click to enlarge)...
Source: Saxo Bank. Create your own charts with Saxo Trader click here to learn more 

... and since 2010 (monthly chart, click to enlarge):
ITKY longer term
Source: Saxo Bank

USDTRY since April 2016 (daily chart, click to enlarge):
USDTRY daily
Source: Saxo Bank

USDTRY since 2010 (monthly chart, click to enlarge):
USDTRY monthly
Source: Saxo Bank
— Edited by Michael McKenna

Clemens Bomsdorf is a consulting editor at
Clemens Bomsdorf Clemens Bomsdorf
As an update you might want to read this Reuters report from today, August 4, on how Erdogan plans to fight businesses linked to Gülen:


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