Iraqi crisis will affect Turkish current account gap adversely: Finance minister

ISTANBUL

Mehmet Şimşek speaks at Istanbul’s Financing Sustainable Development conference, June 17. AA Photo

Political instability and violence will have a negative impact on Turkey’s current account deficit, Finance Minister Mehmet Şimşek has said, fueling worries on the country’s overreliance for external energy resources.

“If the latest developments [in Iraq] aren’t resolved quickly, this will be an unfortunate situation for us,” Şimşek said June 17, speaking at Istanbul’s Financing Sustainable Development conference.

“Geopolitical tensions are unfortunately a risk factor this year and the incidents in Iraq will adversely affect the current account deficit,” Şimşek said, highlighting how the current tension between Ukraine and Russia also poses a risk to the Turkish economy.

“Unfortunately we are in a geographically problematic region,” the minister said.

Some 49 members of Turkey’s Mosul Consulate and 31 truck drivers were kidnapped by the Islamic State of Iraq and the Levant (ISIL), after they seized Mosul late on June 9. One of the Turkish drivers managed to escape over the weekend.

Analysts say the ongoing hostage crises in Iraq is more threatening to Turkey’s economy due to its close trade, business ties and dependency on low oil prices from its neighbor.

However, Şimşek also claimed the picture is not entirely dark, citing recovery in Europe, moderate domestic consumption, value loss in the Turkish Lira and better-than-expected tourism figures as some of factors that helped to narrow the current account gap.