Two Messy Paths to the Same Emerging-Market Turmoil
Despite their leaders’ opposing banking philosophies, the economies of Argentina and Turkey have wound up in the same place.
Argentine President Mauricio Macri (left) meets with Turkish President Recep Tayyip Erdogan during the Group of 20 Leaders’ Summit in Hamburg, Germany, on July 8, 2017.
Photographer: Anadolu Agency/Getty Images
There’s no politician more devoted to cheap money than Turkish President Recep Tayyip Erdogan, and no country that charges higher rates on its money right now than Argentina.
That’s just the start of the contrasts between two governments in the eye of an emerging-markets storm. Both economies are struggling with high inflation and falling currencies and are at risk of recession. On almost every count, Argentine President Mauricio Macri has done the things investors typically demand in such situations— even if he’s sometimes botched the implementation. Since June, he has hiked interest rates to a world-high of 60 percent, turned to the International Monetary Fund for help, and announced sweeping budget cuts for 2019—the year he’s up for reelection.