Turkey is slipping into a protracted recession. To make things worse, the country’s purse desperately lacks dollar cash. Such grave economic problems have not come out of a clear blue sky. Turkey was involved in several dubious military campaigns and local conflict with neighboring countries. The COVID-19 pandemic came as a double whammy. The country’s budget lacks massive revenues from the travel business. Besides, export revenues have been shrinking for a few months in a row. Turkish gas companies owe Russia $2 billion for 2019. Last but not least, strongman Recep Tayyip Erdoğan appointed his buddies and relatives as top officials.

As a result, Turkey’s current account deficit widened sharply to $5.06 billion in May, the largest current account gap since May 2018. This is happening on the background of steep depreciation of the Turkish lira. Meanwhile, foreign cash holdings are waning while the public debt is swelling month by month.

No wonder, foreign investors lost faith in Turkey’s economy. Amid the capital flight, investors have sold local stocks worth $847 million and debt securities equaling $1.01 billion. With such a huge current account deficit, President Erdogan rejects any idea to apply for a loan to the IMF. The thing is that powerful international lending institutions approve bailout to autocratic regimes on condition of structural reforms. The US Federal Reserve is unwilling to provide Turkey with a loan, citing political dependence of its central bank. Earlier, Recep Tayyip Erdoğan ventured to borrow from Japan and the UK but without any success. Only Turkey’s ally Qatar helped Ankara improve liquidity conditions and replenish depleted forex reserves with $15 billion through a currency swap agreement. To sum it up, Turkey’s economy is about to hit rock bottom.