Turkey’s economy takes another hit as protests rock the country

Summary

Marketplace Morning Report: Turkey’s Economy Takes Another Hit as Protests Rock the Country
Release Date: March 24, 2025

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Overview

In this episode of the Marketplace Morning Report, host Luke Wilson delves into the deteriorating economic situation in Turkey amidst widespread protests. The episode provides an in-depth analysis of the factors contributing to Turkey's economic instability, the government's response, and the broader implications for both domestic and international markets. Additionally, the report touches upon a significant event at London Heathrow and explores the challenges faced by Chile's salmon farming industry amidst global trade tensions.

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Turkey’s Economic Turmoil

Political Unrest and Economic Mismanagement

The episode opens with live coverage from the BBC World Service by Luke Wilson, highlighting the fifth consecutive night of protests in Turkey following the arrest of Istanbul Mayor Ekrem Imamoglu on charges of corruption. Imamoglu, a key political rival to President Recep Tayyip Erdogan, has seen a surge in popularity, partly due to growing public dissatisfaction with the government's handling of the economy.

Nick Marsh, Marketplace’s business correspondent, provides a comprehensive overview of Turkey's economic struggles:

"Turkey's seen some pretty bad economic mismanagement for the past four, five years... We’re talking about 70% [inflation] at one point."
(01:16)

Marsh attributes the crisis to Erdogan's unorthodox decision to lower interest rates despite soaring global inflation, leading to a plummeting Turkish lira and skyrocketing import costs. This economic strain has fueled public anger and unrest across the nation.

Market Reactions and Government Interventions

The discussion shifts to the immediate economic repercussions of the protests. Following Imamoglu's detention, Turkey's stock market experienced significant volatility:

"On Wednesday, markets tumbled as much as 7.8%. The Turkish Central Bank had to scramble to try and protect the lira."
(02:28)

In a swift move to stabilize the economy, the Central Bank intervened by spending nearly $12 billion to preserve the lira's value and implemented measures such as banning short selling and relaxing share buybacks. Despite these efforts, the markets remain fragile, with only a slight rebound seen the following Monday:

"This morning, Monday morning in Turkey, we saw a small increase in the value of shares in Turkey's stock market."
(02:21)

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Global Economic Implications

Heathrow's Power Resilience and Market Impact

Transitioning from Turkey, the report covers an incident at London Heathrow Airport where a fire disabled an electrical substation. Tom Simons from the BBC World Service explains:

"Losing a substation was a unique event, but there were two others available. That is a level of resilience."
(03:27)

The disruption led to temporary airport closure for safety reasons while power supply was reallocated. Despite the incident, airline stocks in Europe showed resilience, with British Airways owner IAG and Wizz Air experiencing modest gains:

"British Airways owner IAG is up more than half a percent on London's FTSE 100 index, while low cost carrier Wizz Air is up nearly 2%."
(03:59)

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Chile’s Salmon Farming Industry Amid Trade Tensions

Industry Overview and Challenges

The episode shifts focus to Chile's salmon farming sector, a vital industry providing employment and driving exports. Jane Chambers reports from a processing plant in Puerto Montt, highlighting the industry's reliance on key export markets like the United States and Japan.

Arturo Clement, president at Salmon Chile, discusses the challenges posed by global trade tensions:

"Canada has been historically the smaller but still quite significant seller of salmon to the US market, but there's a deep concern among the Canadian sellers that they've lost the US market or they become less competitive in that US market."
(06:02)

With looming threats of increased tariffs and existing free trade agreements, Chile's salmon industry faces uncertainties that could impact its growth and competitiveness.

Call for Industry Support and Regulation

Clement emphasizes the need for government support and clear long-term strategies to navigate regulatory hurdles:

"We need to define a long term strategy regarding salmon farming."
(06:30)

Concerns include restrictive agriculture laws and the use of antibiotics in fish farming, although industry representatives assert compliance with safety standards.

Javier Soto, manager of a smoking plant, underscores operational challenges:

"For us has been very difficult to grow because we have too many regulations."
(06:30)

Despite these obstacles, there is potential for expansion, as highlighted by Soto's facility's capacity to double its workforce during peak demand.

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Conclusion

The Marketplace Morning Report delivers a comprehensive analysis of Turkey's ongoing economic crisis exacerbated by political unrest, the resilient response of global markets to unexpected events like the Heathrow power outage, and the intricate dynamics of Chile's salmon farming industry amidst international trade tensions. Through expert insights and detailed reporting, listeners gain a nuanced understanding of the interconnectedness of global economies and the challenges they face.

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Notable Quotes:

• Nick Marsh on Turkey's economic mismanagement:
  "We’re talking about 70% [inflation] at one point."
  (01:16)

• Arturo Clement on Chile's salmon industry challenges:
  "We need to define a long term strategy regarding salmon farming."
  (06:30)

• Tom Simons on Heathrow's power resilience:
  "That is a level of resilience."
  (03:27)

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This summary provides an encapsulated view of the episode for those who haven't listened, highlighting key discussions and insights with appropriate attributions and timestamps.

Transcript

[David Brancaccio]

Hey, it's Marketplace Morning Report host David Brancaccio. When things change quickly and dramatically, Marketplace is here to help you stay grounded and informed. No sensationalism, just facts and context. It's our March fundraiser, though, and you can be part of our mission to raise the country's economic intelligence when you donate to our nonprofit newsroom today. Every single donation makes a difference. We need you. Go to marketplace.org donate Turkey's economy takes.

[Luke Wilson]

Another hit as fierce protests rock the country. Live from the BBC World Service, this is the Marketplace Morning Report. I'm Luke Wilson in for Liana Byrne. Good morning. Protesters and police have clashed in Turkey on a fifth night of demonstrations after the mayor of Istanbul, Ekrem Imamoglu, was arrested and charged with corruption. Mr. Amomoglu is the main political rival to the Turkish President, Recep Tayyip Erdogan, whose government appears to be more and more concerned about the impact of the unrest on the economy. Our business correspondent Nick Marsh joins me now. Hi, Nick.

[Nick Marsh]

Hi, Luke.

[Luke Wilson]

Just remind us, what is Turkey's situation economically like?

[Nick Marsh]

Yeah, well, Turkey's seen some pretty bad economic mismanagement for the past four, five years. Now. It's mainly to do with really crippling inflation. While the majority of the rest of the world was dealing with this rising global inflation, President Erdogan insisted that Turkey's central bank actually decrease interest rates, which is unorthodox to say the least. It baffled economists and it led to this unbelievable level of inflation that we've seen in Turkey. We're talking about 70% at one point. The value of the Turkish lira also plummeted, which meant that imports, things like energy, became incredibly expensive. Money started pouring out of the country. So if you're looking at this public anger we've been seeing on the streets in Turkey at maybe why Ekrem Imamolu's popularity has been increasing over the past couple of years. This is the overall economic picture. This is the context that we've been seeing.

[Luke Wilson]

And has there been any economic reaction, markets, currency, things like that, to these latest developments over the past week?

[Nick Marsh]

This morning, Monday morning in Turkey, we saw a small increase in the value of shares in Turkey's stock market. That's a small recouping of pretty dramatic losses that we saw last week after the initial detention. On Wednesday, markets tumbled as much as 7,8%. The Turkish Central bank had to scramble to try and protect the lira. On Friday, it spent nearly $12 billion to try and preserve its value. And they've banned things like short selling. They've relaxed share buybacks as well just to protect the markets.

[Luke Wilson]

Nick Marsh, our business correspondent, thanks for joining us on Marketplace.

[Nick Marsh]

Thanks very much.

[Luke Wilson]

After London Heathrow shut down on Friday, where a fire knocked out an electrical substation, the boss of the UK's National Grid, which manages the electricity network, says it did provide enough power to keep Europe's busiest airport open. Here's the BBC's Tom Simons.

[Tom Simons]

The National Grid is the main source of power for Heathrow, its chief executive, John Pettigrew told the Financial Times. Losing a substation was a unique event, but there were two others available. That is a level of resilience, he said. In the early hours of Friday morning, Heathrow managers decided to close the airport on grounds of safety while they switched to the alternative National Grid supplies. The airport's chief executive, Thomas Waldby, agreed the delay was not due to a lack of power, but the need to reallocate the power supply.

[Luke Wilson]

The BBC's Tom Simons let's do the numbers. And staying with the fallout from Friday's incident at Heathrow, airline stocks in Europe are rebounding this morning. British Airways owner IAG is up more than half a percent on London's FTSE 100 index, while low cost carrier Wizz Air is up nearly 2%.

[Jane Chambers]

The salmon farming industry has transformed southern Chile, providing jobs for around 86 indirectly and directly. This is Multi X's processing plant in the coastal town of Puerto Montt, 11 hours drive down south from Chile's capital Santiago. They process fresh and smoked salmon.

[Javier Soto]

My name is Javier Soto. I am the manager of the smoking plant.

[Jane Chambers]

Piles of salt in front of us. The salt from the Atacama Desert.

[Javier Soto]

This is our recipe we use. This is salty combined with brown sugar. It depends on the recipe or what market we are selling. The we use a different amount of salt and sugar. Okay, so this factory can produce 300 tons of final product per month.

[Jane Chambers]

The largest export markets are the United States and Japan.

[Javier Soto]

We have six smokers for doing the recipes. The recipes can have 30 minutes or until six hours. It depends what market you are in. For example Japan, they love the smell of the smoke. In case of the US they prefer more the salty and so it's shorter.

[Jane Chambers]

Now the threat of 25% tariffs on Canadian salmon exports to the U.S. and trade tensions between the U.S. and Europe could help boost the already strong U.S. market for Chilean businesses. Around half of U.S. salmon imports came from Chile in 2022.

[Arturo Clement]

Chile has a free trade agreement with the United States. So in theory there's no tariffs Matt.

[Jane Chambers]

Craise is the founder of Spheric Research, an independent research house which specialises in global seafood markets.

[Arturo Clement]

Canada has been historically the smaller but still quite significant seller of salmon to the US market, but there's a deep concern among the Canadian sellers that they've lost the US market or they become less competitive in that US market.

[Jane Chambers]

But Chile may need more than just weaker competition. Arturo Clement, president at trade body Salmon Chile, says the industry needs more support to encourage investment.

[Javier Soto]

Well, for us has been very difficult to grow because we have too many regulations. So what we need is we need to define a long term strategy regarding salmon farming.

[Jane Chambers]

Arturo is referring to unresolved issues about where the industry is allowed to farm and a planned new agriculture law, which he thinks will be restrictive. There are also concerns over the use of antibiotics to tackle a bacterial disease. The industry stresses antibiotics are used within the law and there's no trace of them when the fish are exported. Back at Javier Soto's smoking plant, his colleague Armando Bowden says they have the capacity to meet more demand.

[Javier Soto]

Today there are around 480 people working here, and when we are at our busiest time, we can have more than 900 people working here.

[Jane Chambers]

There could be an opportunity for Chile's salmon industry with the current global trade tensions, but it faces its own challenges in Chile. I'm the BBC's Jane Chambers for Marketplace.

[Luke Wilson]

I'm Luke Wilson with the Marketplace Morning Report from the BBC World Service.

[Janelia Espinal]

Consumer confidence had its sharpest monthly decline since 2021, which means we're all in our feels about money. And while uncertainty is the only constant these days, it's also a great reason to get serious about understanding personal finance. I'm Janelia Espinal, host of Financially Inclined, a podcast from Marketplace that makes learning about money simple. Learn about practical skills like negotiating job offers, dealing with money and friendship and love, entrepreneurship and student loans. Get serious about your money and build a life you've always dreamed of. Listen to Financially Inclined wherever you get your podcasts.