Turkey has suffered from a currency collapse and inflation over the past two years.
In 2020, the COVID-19 epidemic dealt Turkey another critical blow, pushing it into a bottomless abyss of recession. Turkey’s local currency, the lira, is rapidly collapsing at a record speed and its foreign exchange reserves have bottomed out.
In this case, Turkey raised a big stick called “trade protection.”
Recession Quagmire
The Turkish economy has been in a long-term recession since the second half of 2018 , not to mention that the new crown epidemic in 2020 has made its fragile economy even worse.
In September 2020, the international rating agency Moody’s lowered Turkey’s sovereign credit rating from B1 to B2 (both levels are junk) on the grounds that the country The continued decline in foreign exchange reserves has led to risks in the balance of payments, structural challenges to the economy, and financial bubbles.
In the third quarter of 2020, the Turkish economy showed a recovery trend. However, according to the latest data from the Turkish Statistics Institute (TUIK), Turkey’s consumer price index increased by 1.25% in December 2020 compared with November, and increased by 14.6% compared with the same period in 2019.
Compared with the same period in 2019, the prices of miscellaneous goods and services, transportation, food and non-alcoholic beverages increased the most, by 28.12%, 21.12% and 20.61% respectively.
In mid-December last year, Turkish President Erdogan announced some relief plans to help small and medium-sized enterprises and traders tide over the difficulties in the next three months. However, some economists commented that these rescue measures were implemented too late and were small in scale, so they may not have much effect on the hard-hit Turkish economy.
According to the latest survey report released by the polling agency MetroPoll, 25% of Turkish respondents said that they cannot even meet their basic needs. According to data from the Turkish Statistics Institute, in December last year, Turkey’s domestic economic confidence dropped to 86.4 points from 89.5 points in November. Any value below 100 reflects the pessimism of society.
Exchange rate collapse
Among the world’s worst-performing currencies in 2020, the Turkish lira must have Name – From 5.94 lira to 1 U.S. dollar at the beginning of the year, it plummeted to about 7.5 lira in December. The annual decline reached 25%, becoming the worst among emerging markets after Brazil! In early November 2020, the value of the Turkish lira fell to an all-time low: 8.5 lira per US dollar.
This is the eighth consecutive year that the lira has closed down, and most annual declines have been more than 10%. On January 2, 2012, the exchange rate of the lira against the U.S. dollar was 1.8944; but on December 31, 2020, the exchange rate of the lira against the U.S. dollar had fallen to 7.4392, a drop of more than 300% in eight years.
Those who engage in foreign trade should know that when a country’s currency depreciates significantly, the cost of imports will increase accordingly. With the Turkish lira currently falling like this, it is difficult for Turkish importers to say I can’t bear it anymore. In this case, some Turkish businessmen may choose to suspend transactions, even suspend payment of the balance, and refuse to accept the goods.
In order to intervene in the foreign exchange market, Turkey almost exhausted the country’s foreign exchange reserves. But the result is that the lira is still depreciating, and the actual effect is limited.
Faced with the currency crisis, Erdogan once called on the people to buy lira to start a “national battle” to resist “economic enemies.” “If anyone puts dollars, euros or gold under their pillow, go to the bank and exchange them for Turkish lira. This is a national battle,” Erdogan said. “We will not lose the economic war.”
But people tend to buy gold to protect their value at this time – Turks are snapping up gold at a record rate. Although gold prices have fallen for three consecutive months, they are still up about 19% so far in 2020.
Trade Protection
As a result, Turkey, which was suffering from internal and external troubles, raised the banner of “trade protection” Great.
2021 has just begun, and Turkey has already thrown out many cases:
via: China Trade Remedy Information Network
In fact, Turkey has been a country that has initiated many trade remedy investigations against Chinese products before, and it will continue to initiate investigations and impose additional tariffs on some products in 2020.
via: China Trade Remedy Information Network
Special attention needs to be paid Yes, Turkish Customs has a strange rule. If the goods are returned after arriving at the port, the consignee must give written consent and present a “Notice of Refusal to Receipt the Goods.” The goods will become Turkish assets after entering the Turkish port. The customs will treat the goods as having no owner and have the right to auction the goods. At this time, the original importer will be the first purchaser.
Certain regulations of Turkish Customs have been exploited by unscrupulous domestic buyers for many years. If exporters are not careful, they will be in a very passive position.
So if you are exporting to Turkey in the near future, please be sure to pay attention to the security of your payment! </p
