BY ABDURRAHMAN YILDIRIM
SABAH- Turkey was the country the most affected by last year's moderate economic fluctuations. Its stock market went down the most while its national currency was shaken and its interests were rocked. Because Turkey both felt the impact of global markets and was hurt when Central Bank appointments were delayed, inflation rose and two elections were on the horizon. Although the fluctuations settled, the performance difference between Turkey and similar countries lasted for months. When the political uncertainty started to lessen ahead of elections, this difference closed to a certain extent.
In the wake of last month's general elections, we're experiencing new fluctuations right now. At least we aren't facing rising inflation or a new appointment crisis. Uncertainty over the presidential election has ended to some extent. Even if the election is troublesome, its adverse effect on the markets may be marginal. Is Turkey still the weakest link to be affected by the winds of global markets even after the new developments and uncertainties are overcome?
Observers say that the global problem - a liquidity crisis - has so far been experienced in developed markets and will hit developing countries, including Turkey, if it goes further. Countries with high current account deficits as well as those exporting raw materials are thought of as the weakest links. These countries include South Africa, Ireland, Hungary, Indonesia and the Philippines and even Brazil and Argentina as well as Turkey.
In fact, the elimination of political uncertainty may not protect us so much. Even inflation and high interest rates may not be enough. The real question here is the current account deficit. Countries with high current account deficits are affected the most, while those with surpluses are mostly insulated. But every country is affected.
It's a great advantage for Turkey that its foreign exchange account is on a larger scale. This may alleviate the effect of capital outflow from Turkey. The sale of foreign currency by the domestic markets cushioned the effect of the fluctuation on Turkey. This year domestic markets sold foreign currency at difficult times, as they did last year. But the difference is that currency accounts rose by $32 billion, which may keep us from being the country hit the hardest.