Sky's Ian King examines the pressures on Turkey's fragile economy and says the market is currently only voting one way.
Turkey found itself the centre of attention in financial markets when, last summer, a diplomatic row with the United States spilled over into a full-blown economic crisis.putting pressure on the Turkish central bank not to raise interest rates
A visit to Turkey in October from Mike Pompeo, the US Secretary of State, also added to a sense that US-Turkish relations were back on track, as did Mr Erdogan's co-operation with the US in investigating the murder of Jamal Khashoggi, the Saudi Arabian journalist.The crash in the Turkish lira also helped make the country's exports more competitive and, between August and November last year, Turkey even ran a trade surplus.
This was followed by news, last week, that the authorities appeared to be trying to prevent further falls in the lira. The cost of insuring against a default in Turkish government debt also shot up and, despite the restrictions, the Turkish lira continued to fall. The concern for investors now will be that Mr Erdogan engages in short-term fixes in an attempt to rebuild his popularity rather than embark on the reforms needed to improve the Turkish economy's competitiveness over the longer term.
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