For most of the 2000s, Turkey was one of the world’s fastest-growing economies. The country’s ambitions soared even higher than its achievements: Ankara openly aspired to be the world’s 10th-largest market with a $2 trillion economy, exports reaching $500 billion, and a per capita income of $25,000. Every buzzword that global financial elites invented for their favorite combination of high-potential emerging markets—such as Goldman Sachs’s MINT and the Economist Intelligence Unit’s CIVETS—had a T for Turkey.
In the past month, the euphoria turned into anguish. The country plunged headfirst into an economic turmoil the likes of which it had not lived in a generation. Year to date, the lira lost almost 37 percent of its value against the dollar—around half of it during the roller coaster of the last month. Thirteen of the 35 Turks listed in Forbes’s list of the world’s wealthiest people have seen their fortunes fall below the billion mark. Turkish companies now hold more than $200 billion in debt, close to 10 percent of it due by the end of next year—much of it held by European banks. Spanish banks hold more than $80 billion in Turkish debt, French banks are owed close to $40 billion, and Italian banks about $20 billion. Turkey’s economic malaise can easily give Europe, and the entire global economy, a deadly flu.
