Turkey now hostage to 'hot money' – columnist

Turkey’s economy has become a hostage to short term inflows of foreign capital that can leave the country at any moment.

The failure of the government to boost production of local goods and services and a slide in long-term foreign investment means the country must rely on such 'hot money' to finance its widening current account deficit, said Ibrahim Kahveci, a columnist for the pro-government Karar newspaper.

Portfolio inflows have surged to $23.5 billion so far this year from $8.3 billion in 2016, providing proof that Turkey is becoming reliant on such investments, which can leave as quickly as they come, to prevent economic turmoil, Kahveci said.

At the same time, the government is blaming speculators for the country’s ills, labelling them enemies intent on bringing down the economy. Nobody in Turkey is asking why the government is following policies that rely so much on imports and consumption, he said.

The same people who accuse foreigners of a conspiracy against the country are retiring in their fifties and consuming the goods of these “crusaders” who are working until they are 65 or 68, Kahveci writes. Meanwhile banks are using about $103 billion in foreign currency to lend to consumers at cheap rates, he said.