Turkish jewelry industry faces downturn as U.S. consumption wanes

Abdurrahman Yalcinkaya, a Turkish gold dealer, speaks in an interview with Xinhua inside his office in Istanbul, Turkey, June 21, 2022. (Xinhua/Shadati)

by Zeynep Cermen

ISTANBUL, June 24 (Xinhua) -- In an interesting example of globalization, Abdurrahman Yalcinkaya, a Turkish gold dealer, found his business has been dented by the surging inflation in the United States.

Sitting inside his big office in Kuyumcukent, a neighborhood in Istanbul that serves as a hub of Turkey's jewelry industry, the businessman said many U.S. gold companies have halted their orders from Turkey indefinitely as American consumers' demand has decreased.

Yalcinkaya noted that Turkey's gold exports to the United States had drastically increased during the COVID-19 pandemic when the U.S. government stepped up money-printing to ease its economic woes.

"After receiving their relief cash, many Americans started to invest in gold and buy jewelry, a fact that boosted our exports significantly," Yalcinkaya said.

"But the demand dropped significantly after the U.S. government had stopped the relief plan and people had spent the money they had got," he added.

Moreover, inflation in the United States has risen to the highest level in nearly 40 years, pushing up the cost of living in the country and dampening the purchasing power of Americans.

Yalcinkaya recently attended a gem and jewelry show in Los Angeles, where he had a series of meetings with American gold company owners.

"Big company owners told us that they expect a serious recession by the end of the third quarter," which caused them to cancel orders, Yalcinkaya said.

"Now we can say the good old days are behind us," the businessman added.

The annual rate of U.S. consumer inflation in May surged to 8.6 percent, which prompted the U.S. Federal Reserve to raise its benchmark interest rate by 75 basis points on June 15, the sharpest rate hike since 1994.

Erhan Aslanoglu, an Istanbul-based economist, said "inflation has exceeded the Fed's target and even its forecasts," adding that the markets anticipate more rate increases from the Fed by the end of the year.

The economist raised concerns about a likely recession in the United States resulting from the Fed's rate hikes, noting that Turkey should be prepared to see a much worse downshift in foreign demand for its products.

Turkey is also in the throes of an economic downturn, registering an eye-watering 73.5 percent year-on-year inflation in May. Analysts said the Middle East country is vulnerable to financial fluctuations in the global markets and should be keenly cautious of the uncertainties created by the Fed's interest hikes.