Jun 01 2018

Turkey and Argentina are doomed – ZeroHedge

Turkey and Argentina are doomed because of a crisis in their balance of payments, ZeroHedge reported.

Argentina is already getting an International Monetary Fund bailout and it’s only a matter of time before Turkey does too, ZeroHedge’s Tyler Durden said, citing data from Michael Cembalest, chairman of market and investment strategy at JPMorgan Asset Management.

“Turkey looks like an unstable EM economy of the 1980’s and 1990’s and is a country whose problems should not be over-generalized,” he said. “This goes double for Argentina.”

Even though President Recep Tayyip Erdogan lost a battle with markets when he agreed to raise interest rates to defend the lira, the big risk is that Turkey doesn’t have enough currency reserves to cover its short-term debt, “particularly if it looks like capital controls will be imposed”, Durden said.

Turkey’s current account deficit has widened to more than 6 percent of gross domestic product, according to March data. Trade figures for April, published on Thursday, show the deficit is likely to deteriorate further as the gap in April between imports and exports widened 36 percent.