Turkish currency crisis: cheaper goods for consumers, more risks for large businesses
The recent significant drop in the value of the Turkish lira promises cheaper goods for consumers in Lithuania but brings in more risks for Lithuanian businesses exporting to this Middle Eastern country, analysts say.
They say the risks are related to Turkish companies' reduced abilities to pay for earlier signed orders.
The value of the Turkish lira has plummeted 38 percent against the US dollar since the start of this year to a record-low level but it's starting to recover. Experts say it's good for smaller traders if they now went to Turkey to buy goods for reselling.
"If somebody wants to go there and sign good supply contracts, they should better hurry up," Aleksandras Izgorodinas, an economist at the Lithuanian Confederation of Industrialists, told BNS Lithuania.
Last year, Lithuania's exports to Turkey was valued at 389 million euros, and stood at 116 million euros in the first half of this year. Imports from Turkey stood at 161.6 million euros last year, and 84.6 million euros in January-June.
Iron, steel and wheat made the majority of Lithuania's exports to Turkey last year, and the Baltic country mainly imported clothes from Turkey.
Analysts warn that Lithuanian businesses are facing indirect risks as a large part of the country's exports is an integral part of the EU production chain supplying Turkey with industrial goods, including vehicles, machinery and equipment.
"So this category, speaking about our industry, is in a certain risk zone as, let's say, if a German producer loses a Turkish order, so Lithuanian production partners receive slightly fewer orders as we provide quite a lot of production services to Germans and Scandinavians," Izgorodinas said.
Similar risks exist for direct exports of Lithuanian metals to Turkey, he added.
Moreover, if the rate of the Turkish lira remains low, marketplace businesses will find it more beneficial to bring goods from Turkey.
Zita Sorokienė, head of the Lithuanian Association of Small Businessmen and Tradesmen, hopes small businessmen will be able to cut prices in Lithuania after buying cheaper goods, especially for the fall and winter seasons.
"There's a high possibility that prices of Turkish goods will go down," she told BNS Lithuania.
The economist of the Lithuanian Confederation of Industrialists says the Turkish lira might underline Lithuanian businesses' trust in Turkish companies.
"Companies will be even more skeptical about Turkey and will be careful about who they work with," Izgorodinas said.
The recent drop in the value of the Turkish lira and smaller prices are attracting more and more Lithuanian to Turkey, but they have little chance to save some money here, experts say.
According to Linas Aldonis, head of the Novaturas tour operator, contracts with Turkish hotels were signed before the season and are valued in euros, so changes in the value of the Turkish lira have little affect on tour package prices.