April 12 2020
Today Turkey’s crisis is not only a health crisis followed by the coronavirus outbreak and an economic crisis triggered by it. Rather, it is a health crisis and an economic crisis triggered by it, on the top of an already ongoing economic crisis due to foreign currency debts of non-financial corporations. Cookie cutter applications of what may work elsewhere will not work in Turkey.
Here we are, in a debt crisis again, this time with the real sector indebted and levered as never before. Turkey, as a whole, has never been as indebted as we are in this episode. It has to be clear that the loss due to the lira depreciation is a real loss that will have to be shouldered by somebody.