Abdurrahman Yalcinkaya, a Turkish gold trader, speaks in an interview with Xinhua at his office in Istanbul, Turkey, June 21, 2022. (Xinhua/Shadati)
by Zeynep Cermen
ISTANBUL, June 24 (Xinhua) — In an interesting example of globalization, Abdurrahman Yalcinkaya, a Turkish gold trader, found his business had been shaken by soaring inflation in the United States.
Sitting in his large office in Kuyumcukent, an Istanbul neighborhood that serves as a hub for Turkey’s jewelry industry, the businessman said many US gold companies had halted orders from Turkey indefinitely. , as US consumer demand declined.
Yalcinkaya noted that Turkey’s gold exports to the United States increased significantly during the COVID-19 pandemic when the US government stepped up banknote printing to ease its economic difficulties.
“After receiving their relief money, many Americans started investing in gold and buying jewelry, a fact that boosted our exports significantly,” Yalcinkaya said.
“But demand dropped significantly after the US government stopped the relief plan and people spent the money they got,” he added.
Additionally, inflation in the United States has reached its highest level in nearly 40 years, driving up the cost of living in the country and weakening Americans’ purchasing power.
Yalcinkaya recently attended a gem and jewelry expo in Los Angeles, where he had a series of meetings with owners of US gold companies.
“Large business owners told us they expected a severe recession by the end of the third quarter,” leading them to cancel orders, Yalcinkaya said.
“Now we can say the good old days are behind us,” the businessman added.
The annual rate of consumer inflation in the United States in May jumped to 8.6%, prompting the United States Federal Reserve to raise its benchmark interest rate by 75 basis points on June 15, the biggest rate hike since 1994.
Erhan Aslanoglu, an Istanbul-based economist, said “inflation has exceeded the Fed’s target and even its forecast”, adding that markets are pricing in further rate hikes from the Fed by the end of the year. end of the year.
The economist raised concerns about a likely recession in the United States resulting from Fed rate hikes, noting that Turkey should be set to see a much worse drop in foreign demand for its products.
Turkey is also in the throes of an economic slowdown, recording sky-high inflation of 73.5% year-on-year in May. Analysts said the Middle Eastern country is vulnerable to financial swings in global markets and should be very cautious about the uncertainties created by the Fed’s interest rate hikes.
(Web editor: Sheng Chuyi, Bianji)