High inflation in Turkey and a surge in foreign borrowing by its banks could plunge the country into crisis as soon as next year, according to asset manager GAM, which has cleared its portfolio of all positions in Turkish assets.
Paul McNamara, an investment director at the firm which manages 184 billion Swiss francs ($186 billion) globally, said Turkey was an exception to a broad trend of shrinking balance of payments deficits and rising foreign exchange reserves across emerging markets.
“Turkey is by far and away the country we are most worried about. Turkey looks to us like an accident waiting to happen” McNamara told the 2018 Reuters Investment Outlook Summit.
Double-digit inflation in energy importer Turkey could be exacerbated by oil’s run-up to two-year highs, while a construction boom was another destabilizing factor.
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