Turkey's Economy Is A House of Cards - Consumer Debt Crisis Emerges | WHAT REALLY HAPPENED

Turkey's Economy Is A House of Cards - Consumer Debt Crisis Emerges

Turkey's soaring inflation, plunging currency, surging interest rates, and a collapsing stock market, has ended almost two decades of stable economic growth and the "good life" for Turkish consumers that started in 2001. Now, the greatest threat facing Turkey is a structural one: its desperate need for foreign financial resources.

A stable economic environment combined with easy access to global liquidity provided Turkey with abundant foreign resources.

The decade of expansionist monetary policies of the Federal Reserve and the European Central Bank enabled countries like Turkey to obtain cheap foreign resources and endowed Turkey with a rate of about 5% stable growth.

From 2003-2008, Turkey registered an annual growth of 5.9%. From 2009-2017, the rate of growth was 4.9% per year.

However, after 2014, there were signs the stable growth party was coming to an end. External expansionist policies were nearing an end and interest rate hike cycle was imminent.

From 2014 to the end of 2017, Turkey was able to prolong the business cycle but was severely damaged in the emerging market meltdown of 2018.

As of recent, headline economic indicators suggest the Turkish economy is set for a painful recession, despite the government asserting the economy is merely “rebalancing.”

Turkish banks are now panicking that nonperforming consumer loans are set to explode in 2019.