Baku, Azerbaijan, May 10
By Aysham Rustamova – Trend:
The weakening of the Turkish lira will also affect Azerbaijan, and this will lead to goods being imported from Turkey at a cheaper price, Samir Aliyev, an expert at the Center for Support of Economic Initiatives, told Trend.
According to him, Turkey is one of the main trade partners of Azerbaijan. A decrease in the lira exchange rate will lead to an increase in imports of Turkish goods.
"The weakening of the Turkish lira will continue for some time. In terms of imports, the fraternal country always shares the 1st and 2nd places with Russia. In 2015-2016, the volume of Turkish imports to Azerbaijan stood at about 1.2 billion, in 2018 at 1.6 billion. With the cheapening of the lira, Turkish imports will increase. This will cause a decline in the prices of goods from Turkey," said Aliyev.
A weak lira, however, can create difficulties for exports from Azerbaijan, the expert believes.
"Until today, exports have always prevailed over imports in the trade cooperation of Azerbaijan and Turkey. The exports mainly consist of oil and gas. Azerbaijan’s non-oil exports to Turkey are not so big. There is a negative balance in trade with Turkey. We buy more Turkish goods. We mainly import clothes, food, appliances, and household items. In this regard, a cheap lira will create difficulties for our already limited exports of non-oil products to Turkey. In Turkey, inflation is higher than in Azerbaijan. This means a negative impact on the effective value of the Azerbaijani manat against the Turkish lira, which can create a number of difficulties in terms of the competitiveness of local businesses," Aliyev said.
The rate of the Turkish lira dropped to a year-low after the country's authorities annulled the results of the local elections in Istanbul. At the beginning of the morning trading on May 7, the lira dropped against the dollar to 6.1976. This is the highest value since September 2018, when an increase in the interest rate on the US dollar and significant payments in foreign currency led to the threat of a collapse of the country's banking system. Since early 2019, the US dollar has risen in price against the lira by more than 16 percent.