It was not that long ago that the economic meltdowns taking place in Greece and Cyprus dominated the headlines. And no one should have forgotten about the “PIIGS” analogy for the major economic problems in Portugal, Italy, Ireland, Greece and Spain. Now the financial markets are having to deal with a currency meltdown taking place in Turkey.

Unfortunately, the situation in Turkey and in the Turkish lira was just made that much more complicated with new doubling of tariffs imposed directly against Turkey’s steel (50%) and aluminum (20%) as President Trump is looking for a better outcome as tensions are higher between the United States and the struggling nation.

24/7 Wall St. has decided to take a look at the situation in Turkey so that investors, economists and the public have an idea of just how important and relevant this could be. Remember that many financial market interruptions have historically come from unexpected events. The initial view here is that Turkey is large enough in population and in the global economy that there are some economic and geopolitical tail risks that need to be considered.

Turkey’s President Recep Tayyip Erdogan has referred to winning a current economic war, and President Trump has said that relations with Turkey are not good at this time.

If the public thinks that 3% long-term yields in the United States are a problem, interest rates have risen handily in Turkish bonds and notes. Turkey’s 10-year government bond yields had been at 7.6% earlier, but a headline from Tradeweb showed that those yields jumped up to 8.20% after President Trump’s tweets about tariffs against Turkey’s steel and aluminum.

Turkey’s lira lost more than 10% on Friday alone to over 6.50 per dollar, and Turkey’s external debt to gross domestic product (GDP) is among the highest in the developed world at over 50%. President Erdogan now has even gone as far as urging the Turkish population to exchange their dollars and euro held to buy back into Turkish lira as a mechanism to defend the currency. According to the CIA World Factbook, the Turkish lira was valued at 3.63 per dollar in 2017 and 3.02 per dollar in 2016.

The Turkish government already has lowered its official forecast for 2018 GDP, down to 4% from the prior forecast of 5.5%. Outsiders might as well assume that the damage to Turkey’s GDP might be worse (perhaps far worse) than the official forecasts if things continue to deteriorate.

As far as Turkey’s steel industry, the U.S. Commerce Department shows Turkey as the sixth largest steel supplier to the United States as of 2017. Its rank was 11th in aluminum.

There has been no official statement about European bank exposure to Turkey. That said, reports from Europe indicate that the European Central Bank has become concerned about individual bank exposure to Turkey. A figure from the Bank for International Settlements showed that European banks have over $150 billion worth of loans in Turkey.

There are many stocks and funds that have direct and indirect exposure to Turkey.

Deutsche Bank A.G. (NYSE: DB) saw its American depositary shares (ADSs) trade down 5.2% to $11.75 on Friday as its problems persist, and it is a bank that is expected to have exposure to Turkey. Deutsche Bank’s ADSs have a 52-week trading range of $10.36 to $20.23.

Spain’s top bank, Banco Bilbao Vizcaya Argentaria S.A. (NYSE: BBVA), which is also expected by the markets to have Turkish economic exposure, saw its ADSs trade down 5.3% to $6.44, in a new 52-week range of $6.37 to $9.54.

The iShares MSCI Turkey ETF (NYSE: TUR) is the largest U.S. exchange traded fund for U.S. investors to get exposure to Turkey’s equity market. It was last seen trading down a sharp 15.5% at $21.20 on Friday, in a 52-week range of $19.65 to $47.13. Its trading volume of 6.5 million as of 10:15 a.m. Eastern Time already was approaching a whopping 10-times volume spike.

Turkcell Iletisim Hizmetleri A.S. (NYSE: TKC), or just Turkcell, is a top mobile communication and fixed voice services provider based in Turkey. Its U.S.-listed shares were down 12.9% at $4.93 on Friday after about 45 minutes of trading. It has a $4.8 billion market cap, and its 52-week range is $4.51 to $11.29.

As far as Turkey’s population is concerned, the nation has roughly 79.5 million people as of 2016, according to World Bank data. This makes it very relative on a grander scale when it comes to Turkey’s proximity to Europe. The populations of the nations known as the PIIGS (2016 estimates) were as follows:

• Portugal, 10.32 million
• Italy, 60.6 million
• Spain, 46.56 million
• Ireland, 4.77 million
• Greece, 10.75 million

Turkey’s credit ratings are currently under investment-grade in 2018, meaning that the nation’s government debt carries a junk-bond status at this time. Fitch downgraded Turkey’s debt rating to BB and maintained an “outlook negative” stance in mid-July. According to Trading Economics, Moody’s has Turkey’s Ba2 rating under review as of June, and S&P had Turkey’s rating at BB- in May.

Additional factoids on Turkey and its economy have been taken from the CIA World Factbook, but it now goes without saying that the data ahead may look quite different than it did a year ago. This has been shown as follows:

• Turkey’s largely free-market economy is driven by its industry and, increasingly, service sectors, although its traditional agriculture sector still accounts for about 25% of employment.
• GDP was $2.133 trillion in 2017 (5.1% growth) on a purchasing power parity basis, up from $2.029 trillion in 2016 (3.2% growth) and $1.966 trillion in 2017 (6.1% growth). That ranks as the 14th largest economy in the world based solely on GDP.
• GDP per capita was estimated at $26,500 in 2017 on a purchasing power parity basis.
• Turkey’s unemployment rate was estimated as 11.2% in 2017 and 10.9% in 2016.
• The percentage of the population living below the poverty line was 21.9% based on a 2015 estimate.
• Turkey’s inflation rate based on consumer prices was listed as 10.9% for 2017 and 7.8% in 2016.

Europe also has been paying Turkey to curb migration from Syria and the Middle East into Europe. To complicate matters further, Turkey has been a member state of NATO since 1952.

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