The war deepens Turkey's economic woos

Turkey is one of the countries that maintains trade relations with Russia and Ukraine in several sectors, and although it is one of the countries that has not sanctioned Moscow, the war has collapsed a trade market that was worth 400 billion euros a year, according to La Marea. 

The Turkish textile sector has announced that it is suffering losses amounting to 200 million euros a week due to the cancellation of shipments to Ukraine. The tourism sector is also at risk and is afraid of losing Russian tourists, who are Turkey's most popular visitors.

The sharp fall in the value of the Turkish lira has led to a sharp rise in prices for all products and services. Inflation in Turkey is already over 60 %, although some independent studies say it could be twice as high. 

At the moment, the price of olive oil has risen by 150%, and bread, which is consumed in large quantities during Ramadan, has become 30% more expensive and has shrunk in size. In addition to the rise in food prices, there has also been a rise in the price of energy such as electricity and petrol.

The lira's slump is mainly due to the economic measures imposed by Turkish President Recep Tayyip Erdogan on the Central Bank.  

Turkey's banking regulator has been cutting interest rates to 14%, despite the fact that domestic inflation is up to four times higher. These measures have been taken contrary to the opinion of most economists, who prefer to keep interest rates in line with the level of inflation or even higher, otherwise interest rates will go into the red.

The fall in the value of the lira puts Turkey in a very difficult situation that the government is trying to tackle on several fronts. According to legislation approved by Erdogan's government, commercial loans extended since the beginning of this month may not exceed 10% of the demand requirement. 

The Central Bank has also raised reserve requirements for personal accounts with lenders, but this measure did not achieve its goal of converting accounts with foreign currency figures into lira.