Germany fears that the economic crisis experienced by Turkey will affect the economy of its neighboring European Countries. The Turkish Lira is in chaos and it triggered by the decline in the stock market by half.
The German government is considering providing financial assistance to stabilize the consciously declining economy of Turkey. Turkey followed the economic breakdown suffered by Argentina who is now aided by the International Monetary Fund. It is feared that the economic fall of the two countries is just the start of the fall of other standing dominoes.
Lira has fallen more than 40% since the start of the year following the drastic fall of their stock market of about a half. Investors are now observing the global economic trend on their fear of a repeat of the 1997-1998 Asian financial crises that started with Thailand.
According to CNN, the recent overseas economic turmoil is steered by different factors. One of the major factors is the increased Federal Reserve interest rates and the decreased $4.5 trillion balance sheet in aid to the strengthening of the economy of the US.
The increase in the value of the US currency caused the currency of emerging countries in debt with the US, like Turkey, to significantly decline.
Another factor in the fall of Turkey' is the rise of populism. The developing markets decline is another effect of Trump's populism. The president's trade wars have caused investors to doubt investing in risky markets. According to Mike Labella, head of global equity strategy at QS investors, the global threat of populism is real and its effect starts to amplify. He added that there is no clear end in sight and everyone should bear with it for a while.
Germany fears the domino effect that the fall of Lira might cause to the whole of Europe considering that there is still unrest in the Middle East that causes large-scale migration to the North. Talks about the financial aid already started discussing the range of possibilities of aid that they might provide.
The German government is considering the same aid that they will provide to what was used during the Eurozone debt crisis or a project-specific loan by state-controlled development bank and bilateral aid. Other parts of Europe also expressed their concern to the consequences that they might face as an effect of Turkish economic fall. The French Prime minister Bruno Minister expressed his concern. He said that is is very important to support Turkey's effort in rebuilding its economy.
