Home Daily Blitz Here’s How The Turkey Crisis Can Spark Contagion In Global Markets
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Here’s How The Turkey Crisis Can Spark Contagion In Global Markets

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The following is an excerpt from Pronita Naidu | August 27, 2018 | ibtimes.com |

Turkey’s economic meltdown could soon resemble the Asian financial crisis of 1997-98 and create contagion in global markets, Hugh Johnson, chief investment officer at Hugh Johnson Advisors, said in an interview.

Citing the origins of Asian financial crisis, Johnson told the International Business Times that what appears to be a “fairly-small problem affecting a limited part of our world sometimes transforms into a significant problem for the global economy.” He pointed out that the Southeast Asian financial crisis of 1997-98 began with instability in the Thai economy, caused by some policy mistakes in that country.

The contagion then rippled across economies in SouthEast Asia and other parts of the world through four transmission mechanisms. Johnson worries that the current crisis in Turkey could spread to the European Union, the country’s most important trading partner, in a similar fashion.

Still, he thinks there is good news for the U.S investors. “The good news is that it will not end or it is unlikely to end the current cycle -- stock market, economic, interest rates cycle, or the U.S. bull market, recovery, rise in interest rates. It is not likely to be derailed by what’s happening in Turkey even if it spreads," he says.

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