Crisis in Turkey has the emerging world bracing for a bear market and central bankers staring down fresh complications. Global trade drama saunters on, and populists are finding scattered victories.
Here’s our weekly wrap of what’s going on in the world economy.
The crash of the Turkish lira set the tone for a week of scrambling across global markets, with the government ruling out introducing capital controlsto support the battered lira. President Recep Tayyip Erdogan is ready to boycott iPhones amid the row with the U.S., whose tariff pledges helped accelerate the currency’s rout. The U.S. isn’t giving in, but Qatar is lending a hand. Europe is on edge given its banking exposure, with Italian bonds slumping and Angela Merkel aiming to bring calm. Contagion risk prompted Indonesia and Argentina to raise interest rates, while the U.S. and South Africa probably will stay pat.
Here’s Bloomberg Economics analysis on Turkey contagion. Another sobering thought: Turkey’s just a drill for the real reckoning that’ll come with the quantitative tightening era.