Turkey is the latest country on the run from the global economic crisis but it hopes that its latest tactics will help it out manoeuvre the worst effects.

Turkey up until now has claimed it was well positioned to out manoeuvre the global economic crisis.

However, with foreign capital investment slowing, business drying up, rising unemployment, a big overdraft and a weakening currency it’s now becoming apparent that Turkey isn’t immune but showing serious symptoms of the global fever.

Turkey is hoping that a range of financial initiatives used recently in the western world economies such as the USA and UK will help it to kick-start its own slowing economy and out manoeuvre the downturn.

On Wednesday night the Turkish Central Bank cut base interest rates by half a percent to 16.25% in an effort to kick start the stalling economy. 

The cut is nowhere near as dramatic as those carried out in the UK, Europe or the USA but that could be because the country doesn’t want its currency value hit too hard too soon.

So this could be the first of many cuts over the coming months as the central bank gauges the effects of the cuts on business and the exchange rate. Good news for borrowers but bad news for savers.

With a lack of cash on the world markets Turkey is turning to the International Monetary Fund (IMF) again to secure much needed funds. With such a large bank overdraft it needs a big injection of cash (USD 40 billion) to see it through these tough times.

This is the fourth time the Turkish government has turned to the IMF this decade and Turkey still owes around USD 8.5 billion from previous loans.

But it will be business that needs cash too. Turkish business relies heavily on foreign loans to finance its ventures and it has been very successful in the recent boom years in attracting that investment.

In fact it has been so successful that loans exceed business assets by over USD 80 billion according to some sources. That’s twice the size of the IMF bail out to the Turkish Government!

The global financial crisis is still far from over and investors are very jittery especially with risky emerging market debts such as those in Turkey.

Turkey’s bankers and the government will therefore be praying that their measures will work or both could face a bumpy financial future.