Last Friday, the Lira dropped as much as 17 percent against the dollar and 12 percent against the euro, reported several media outlets. Due to the drop in value of the Turkish currency, the prices of many imported products have increased significantly. In turn, this will slow down the purchases of imported products in the short term. Also wholesalers mentioned that they feel the increase in price. "They predict that they will observe a decline in imports in the short term (within the next three months), but will come back to their old level, in terms of volume once 2019 starts", a wholesaler says.
Another factor that will affect the flower industry is that Turkish consumers will cut back their spending in general and to hold onto their money until the financial situation settles in. "Flowers are regarded as a luxurious item so they will be one of the products that will be impacted by this money holding behavior."
When will volumes be up again?
However the volumes are expected to start rising back up once the volatility of the currency goes down and the market settles in. "Then everyone will be able to see and understand the current market environment and start spending their money again. That way the demand should rise up back to where it was especially in terms of volume. There might be a preference for cheaper (in terms of euro value) products as well once the demand starts to go back to where it was."
Additionally, the wholesalers stress that this crisis originates from political issues. "The Turkish economy is generally vulnerable due to a high current account deficit but the crisis was triggered by the political tensions between US and Turkey due to the imprisonment of an American pastor Andrew Brunson over spy charges and the sanctions that the US has started to impose on Turkey as a result of this imprisonment. Once this political issue is resolved (which should happen sometime in the near future as Turkey has been a very strong ally of the US and NATO for nearly 70 years), the market will settle in and the demand will quickly reverse to where it was."
"To sum up, this aforementioned political issue should be settled in within the next few months in one way or another and that will bring market stability and slowly bring back demand to where it was with the start of 2019."