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Supporters of the pro-Kurdish Peoples' Democratic Party (HDP) light flares as they celebrate along a street after the parliamentary election in Diyarbakir, Turkey |
With the Justice and Development Party (AKP) in turmoil, and a flare-up in violence in the Kurdish southeast, Turkey increasingly looks like a country in crisis. But another election, after president Recep Tayyip Erdogan’s party fell short of a majority in elections this June, and the prospect of continued political instability, is just one of a confluence of difficulties for local banks and borrowers.
“It’s a very challenging environment,” says Serhat Gurleyen, research director at Is Yatirim, the investment arm of Turkey’s biggest private bank by assets, speaking in late August. “There are worries about the normalization of US monetary policy. Europe is struggling with secular stagnation. You have Isis in Iraq, our second biggest export market. To the north, Russia is in recession. And as if all that was not enough, we don’t have a government.”
Lower oil prices, as Gurleyen says, should alleviate external imbalances. But some of Turkey’s biggest fonts of trade, tourism and investment – the Gulf, and Russia – are oil exporters.
