Turkish lira’s losses may resume as government railroads growth – columnist

Turkey’s troubled lira may post further losses later this year because the government is seeking to railroad economic growth as the country emerges from the COVID-19 pandemic, said Erdal Sağlam, an economist and columnist for the Cumhuriyet newspaper.

Data for manufacturing confidence and industrial capacity utilisation rates, released on Tuesday, show that expansion in the economy continues at full speed, Sağlam said on Wednesday. While growth forecasts for the end of the year have improved to near 8 percent, the negative consequences of such a high rate of expansion are not discussed by the government, he said.

The lira has remained stable against the dollar this month, trading at between 8.55 and 8.6 against the U.S. currency. That trend may continue in August, thanks to tourism revenue and vitality in the services industry, Sağlam said.

The latest data suggest that economic growth will remain high in the third quarter, driven by exports. But lively consumer demand, backed by a surge in growth in borrowing, shows that problems on the inflation front will continue to increase.

By September, most analysts expect that global developments and possible domestic developments will spur market movements, Sağlam said. The current account deficit is showing signs of widening again and high growth rates will exacerbate that problem, he said.

These possible economic fragilities are causing great concern, especially in terms of their impact on the value of the lira, Sağlam said.

The lira traded little changed at 8.55 per dollar on Wednesday.