TURKEY may soon become the first G20 country to become bankrupt.
As one of the 20 most prosperous countries in the world, a bankrupt Turkey may not be a good sign for the global economy.
Turkey’s economic woes reportedly started when President Erdogan decided to take on a less conventional approach towards interest rates, destabilizing the country’s economy in the process. However, the country’s problems don’t end there.
Turkey’s economic niche was exports, which in turn was driven by its labor and manufacturing. The problem is that this very manufacturing sector needed a lot of affordable power in the form of Russian oil and gas.
With the war in Ukraine, that oil and gas has gone up in price, which in turn, has led to Turkish products doing the same thing. With their exports becoming more expensive, its export market begins to suffer, and there are talks of a bail out just to keep the power running.
Normally, Turkey’s economic woes wouldn’t matter if it was not a G20 country. But it is, and if it fails economically, especially in the current geopolitical environment, it will have symbolical implications. The creation of organizations like the G20 implies a certain set of assumptions about the nature of wealth growth. For one thing, it implies that GDPs will continue to climb ever upward, that tomorrow always means more production/consumption and integration.
If one of the member states of the G20 goes bankrupt, that means tomorrow is no longer so bright and good. It also implies that the global economy is not as healthy as before. In that sense, the outlook for the global economy influences the outlook for local nations and regions. A weakening global economy can imply weakening national economies on average. In that sense, Turkey’s economic woes is bad news for the G20, which in turn means bad news for the world./PN
