July 20th, 2016
In Business
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If you enjoy this article, see the other most popular articles
If you enjoy this article, see the other most popular articles
Brad Sester is writing in public again
(written by lawrence krubner, however indented passages are often quotes). You can contact lawrence at: lawrence@krubner.com, or follow me on Twitter.
Brad Sester wrote a column on the world economy, all through the build up to the Great Recession. I read him all through 2007 and 2008. Then he went to the Financial Times and his writing was behind a paywall, and I didn’t have a subscription. But now he is again writing in a place I can read him:
Turkey has long ranked at the top of most lists of financially vulnerable emerging economies, at least lists based on conventional vulnerability measures. Thanks to its combination of a large current account deficit and modest foreign exchange reserves, Turkey has many of the vulnerabilities that gave rise to 1990s-style emerging market crises. Turkey’s external funding need—counting external debts that need to be rolled over—is about 25 percent of GDP, largely because Turkey’s banks have a sizable stock of short-term external debt.
At the same time, these vulnerabilities are not new. Turkey has long reminded us that underlying vulnerability doesn’t equal a crisis. For whatever reason, the short-term external debts of Turkey’s banks have tended to be rolled over during times of stress.*
And, fortunately, those vulnerabilities have even come down just a bit over the last year or so. After the taper tantrum, Turkey’s banks even have been able to term out some of their external funding by issuing bonds to a yield-starved world in 2014, and by shifting toward slightly longer-term cross-border bank lending in 2015 and 2016 (See figure 4 on pg. 35 of the IMF’s April 2016 Article IV Consultation with Turkey) And while the recent fall in Turkey’s tourism revenue doesn’t look good, Turkey also is a large oil and gas importer. Its external deficit looks significantly better now than it did when oil was above a hundred and Russian gas was more expensive.
Post external references
- 1
http://blogs.cfr.org/setser/2016/07/19/how-many-reserves-does-turkey-need-some-thoughts-on-the-imfs-reserve-metric/
February 8, 2022 9:33 am
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