PARIS, 22 November 2003 — The Turkish economy, in the process of being nursed back to health with international help, is reasonably well-fortified to survive the latest attacks in Istanbul but nonetheless remains vulnerable to a new wave of violence.
“We’re sticking to a constructive scenario, surely not an end-of-the-world scenario,” said Joel Guglietta, an economist with the French bank Credit Agricole Indosuez following bomb attacks against Istanbul synagogues last Saturday and Thursday’s deadly explosions at British targets in the city.
Analysts at Merrill Lynch said in an analysis that it was “misplaced to talk about any lasting economic damage from these attacks.”
“Indeed, in isolation the terror attacks of the past days should have limited economic impact.” But the note warned that “if the terror campaign against Turkey is sustained it could have a significant impact on investor confidence and the country’s tourism sector, which generated about $9 billion in revenues or just over a fourth of gross domestic product in the last 12 months.”
Guglietta said the reaction of the bond market in Turkey, which unlike the stock exchange remained open, showed that investors — most of them Turkish — did not panic.
The central bank meanwhile has said it is ready to inject liquidity into the economy if necessary, stressing that “there will be no uncontrolled movements of interest or currency rates.”
At the International Monetary Fund in Washington spokesman Thomas Dawson likewise voiced confidence the economy will weather the storm. “The bond and exchange markets have been reasonably strong given the shock and tragedy,” he said.
Turkey is currently following an IMF reform program, bolstered by a $16-billion credit approved in February 2002 to help it shake off a recession. The United States in September announced an $8.5-billion-credit for Turkey, a country seen as vital to Washington’s strategic interests in the region.