Argentina and Turkey are facing an extreme financial crisis which may affect other countries as well.
Turkey has been struggling for a long time due to the sabotaging relationship with the US and depleting value of its currency. Also, Argentina is going through a crisis as the value of Peso has depleted by half its value against the dollar. However, Argentina has decided to take a loan worth $50 billion from the IMF or International Monetary Fund. Though the country had severed ties with the firm a long time back, the President of Argentina feels it as a crucial decision to drag the economy out of the mess.
Steep falling values of Lira and Peso are not only the reason for concern in Turkey and Argentina respectively but also have spiked the tension in the neighboring countries like Russia and South Africa. In fact, the Asian countries like India and Indonesia have also been affected as these countries depend on the cash inflows from the foreign nations.
The world has globalized that has led to a contagious scenario. If a nation is affected due to the falling rate of the currency, the others will follow suit as the trade and bank lending are interconnected. Therefore, the depleting value of the currencies of Argentina and Turkey has not only led to the cheaper holidays but has also raised a few eyebrows of the other countries.
As the economy of a country depreciates, the companies tend to cut the production and jobs to maintain the profit ratio. Also, the imports are affected as the people don’t have the money to spend. Hence, the global export is also affected, sabotaging the economy of the other countries.
However, the experts have confirmed that the Asian countries don’t have anything to worry as the trade links with Turkey and Argentina are weak.