Turkish lira crisis poses additional risk to German economy: finance ministry

BERLIN (Reuters) – Turkey’s currency crisis poses an additional risk to Germany’s economy on top of trade frictions with the United States and the possibility of Britain leaving the European Union without a deal, the German finance ministry said on Monday.

The Turkish lira has lost nearly 40 percent of its value against the dollar this year, hit by a worsening diplomatic rift with the United States and by investor alarm about President Tayyip Erdogan’s influence over monetary policy.

Germany is the second biggest foreign investor in Turkey, whose biggest trading partner is the European Union.

“Risks remain particularly with regards to uncertainty over how Brexit is going to pan out as well as future U.S. trade policies,” the ministry said in its monthly report. “The persistent debate about tariffs and the threat of a trade war are choking trade activity.”

“The economic developments in Turkey present a new, external economic risk,” it added.

Despite such risks, the German economy remains buoyant, supported by state spending, private consumption, low interest rates, a robust labor market and rising real wages, the ministry said in the report.

Companies are also expected to raise investments as the global economy remains in good shape despite the threat of a trade war, it added.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.