Geopolitical Whims and Judicial Risks Drive Volatility: Turkish Analyst Warns of Deeper Crisis

ISTANBUL – Global financial markets are struggling with unprecedented volatility, but for the Turkish economy, the greatest risks are homegrown political and judicial uncertainty, according to financial analyst  and educator Dr. Cüneyt Akman. In a recent broadcast, Akman detailed how high-stakes geopolitical brinkmanship and a calendar packed with domestic legal battles are rendering traditional economic forecasting nearly impossible, pushing the Borsa Istanbul (BIST) to an inflection point.

The Geopolitical Rollercoaster: Gold’s Rally and the Trade War

Akman initially noted that predictions for stock gains and a gold correction were temporarily derailed by a sudden escalation in the US-China trade war. This flare-up began after China’s Commerce Ministry announced sweeping restrictions on rare earth element exports—a critical move that forced a sharp reaction from US President Donald Trump, who briefly threatened 100% tariffs and cast doubt on a planned meeting with Chinese President Xi Jinping.

This geopolitical tension immediately caused a massive flight to safety. Gold, which analysts had previously forecast might hit $4,500 by the end of 2026, quickly surged past $4,300 per ounce in a matter of days.

However, the rapid escalation was matched by an equally swift de-escalation. Trump soon softened his rhetoric, confirming meetings with both Russian President Vladimir Putin and President Xi, signaling a return to the negotiating table.

“The current [global] environment is characterized by constant, high-stakes bargaining,” Akman noted. “The US believes, ‘If we don’t stop China now, we will never stop them.’ This is driving a hegemony war that risks causing a global contraction in trade and growth if left unchecked.”

The analyst stressed that while the markets found relief in the temporary de-escalation—leading to a drop in gold and a rebound in stocks—this volatility is the “new normal,” making market movements highly unpredictable and policy-driven rather than fundamentally based.

Turkey’s Calendar of Uncertainty and Judicial Risk

For the Turkish market, the political landscape is the dominant source of turbulence. Akman highlighted a “calendar of uncertainty” dominated by crucial domestic judicial and political events that overshadow technical economic decisions:

• Judicial Risks: Multiple ongoing court cases concerning Istanbul Mayor Ekrem İmamoğlu and legal disputes surrounding the main opposition party’s (CHP) leadership are key sources of tension. Akman noted that the courts are now preoccupied with internal party congress matters, underscoring the political interference in the judicial system.
• Monetary Policy Impasse: The upcoming Turkish Central Bank (TCMB) interest rate decision is a political tightrope walk. With inflation expected to exceed 30% by year-end, the TCMB is caught between the need for a structural solution and political pressure to cut rates. Akman predicted a symbolic cut of around 150 basis points—enough to placate but not solve the core problems.

Akman stated that domestic problems cannot be solved by merely adjusting interest rates or lowering inflation, which even Finance Minister Mehmet Şimşek has admitted is a struggle.

The $128 Billion Scandal and a Major Banking Arrest

Perhaps the most alarming domestic event highlighted was a major corruption scandal engulfing the nation’s top financial institutions. Akman pointed to the recent detention of former TCMB Deputy Governor Emrah Şener on charges of misconduct.

Akman claimed Şener was the official widely implicated in the controversial $128 billion reserves depletion operation—a massive intervention effort that saw the country’s foreign exchange reserves plummet into negative territory. Şener was also linked to the implementation of the complex Currency Protected Deposit (KKM) scheme.

“A deputy governor, whose signature is on the bank’s communiqués, is now detained—this is the first time in history and a massive scandal,” Akman stated. He added that the official’s alleged role in the reserves crisis and the KKM’s implementation represented a loss of “billions of dollars” to the country, dwarfing the immediate corruption allegations.

Long-Term Structural Threats to the Global System

Looking beyond immediate market fluctuations, Akman warned that the world is heading toward a period of profound structural change and risk, characterizing the current era as a pre-crisis environment:

1. Financial Overhang: The vast imbalance between accumulated financial assets/debt and the real economy necessitates a major correction—either through debt cancellation, a crisis-induced asset evaporation, or high inflation.
2. Deflation in China: The onset of deflation in China, a massive economy, is considered a deeper threat than inflation. Akman argued that deflation is “ten times worse than inflation” and is a sign of severe economic distress.
3. End of Neoliberalism: The analyst suggested that the post-1980 system of deregulation is failing, evidenced by the return of state intervention and tariffs across the globe.
4. Resource and Technology Constraints: Structural growth is hampered by a lack of fundamental technological breakthroughs outside of IT, while increasing productivity through growth exacerbates a mounting climate, water, and pollution crisis. Compounding this, the rise of AI and robotics threatens to render a significant portion of the population unemployable, creating vast socio-economic strain.

Akman concluded that if global leaders fail to address these issues with “common sense,” the world risks descending into massive economic turmoil and conflict, similar to the devastating period of the 1930s. “The noise on the stock market would become the least of our problems,” he concluded.