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How will Turkey benefit from falling oil prices?

While falling oil prices across the globe have raised concern in many regions, there are some nations which look set to benefit from lower prices and could use it as an opportunity to make their mark on the worldwide oil and gas market - one of which is Turkey.

From an economical point of view, the falling prices are having a major effect on the country's current account deficit, with every $10 drop in the oil price improving the deficit by around $4.5 billion, according to analysts' estimates,

Citi Global Research has predicted that the low oil price will be the key catalyst behind Turkey’s current account deficit improving from eight per cent in five per cent in 2014-2015, and could be even more impressive as Turkey’s reliance on oil imports gradually falls due to the discovery in the Black Sea.

Expanding presence

Turkey has made no secret of its desire to become a major oil and gas hub; something assisted by its favourable geographical location between Europe and the Middle East and also a new deal with Russia which will make the country something of a gas gateway.

As such, Turkey is looking very much to the future, and has already begun implementing limitations on consumer credit; something that has now been compounded by the easing of the oil price burden, which is now being reflected in the economy.

Inflation is forecast to fall to around seven per cent next year, which should lead to a cut in interest rates, after the government's doubling of them last year led to widespread confusion and frustration.

Growing confidence

Furthermore, analysts are confident about the country's prospects, noting that public debt is falling, the budget deficit is reducing and compares well to the rest of the world, and the confidence of the public and corporations alike is rising.

A further boon is that improvement in the EU will also help Turkey, as the two have a very close trading relationship, and so the country will only benefit even if oil prices remain at current levels, which is considered sustainable by some.

Ultimately, Turkey will be keeping an eye on oil prices closer than most, as one of the few nations that will not be detrimentally affected if they remain low. Even if they were to rise, its expanding market presence and improving confidence will place it in good stead going forward.

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