Turkey’s crisis in six charts

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Markets have turned against Turkey, as they see an escalating spat between the country’s authoritarian President Erdogan and US President Trump derail a credit-fuelled economy. Risky Finance has prepared six charts that illustrate the severity of Turkey’s problems.

The Turkish Lira has declined precipitously against the dollar, more than any other currency, including the Argentine peso. The currency weakened by 45% since the start of the year, and 60% since the end of 2015. If it persists, this decline will have serious consequences for Turkey.

To investigate this, we use the Risky Finance sovereign tool, which shows iBoxx data for Turkish sovereign and quasi-sovereign debt. There is $120 billion outstanding of this liquid debt, $55 billion of which is in external currency, mostly dollars. A more interesting way to view this is to compare the exposure with other countries, scaled as a percentage of gross domestic product.

Outstanding debt of non-investment grade emerging market sovereigns, scaled by GDP converted to dollars on 13 August. Screenshot of interactive visualisation available to subscribers.

Which GDP figure do we use? We start with the dollar current prices GDP published by the International Monetary fund in April. iBoxx debt accounts for 14% of Turkish GDP, a fairly modest amount compared with other non-investment grade EM sovereigns.

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