Grand Turk seems to be angry with the economy. President Recep Tayyip Erdogan continues to hammer out that high interest rates are the cause of inflation. As a result, he declared on December 20 that it was not necessary, while rising prices ate up the country and the monetary policy it was planting was criticized from all sides. “wait(D) Nothing else (he) »» Rather than keeping interest rates low.
→ Reread.Recep Tayyip Erdogan’s support collapses in Turkey
The Turkish president has continued to cut interest rates for the past few weeks, regularly calling on Islamic lessons banning usury, even if economic theory recommends opposition. Don’t worry: The dictator still demands that the National Central Bank open a lock of credit. By relying on the domestic market, Erdogan wants to drive growth at all costs (7.4% in the third quarter). Since taking power for the first time as Prime Minister in 2003, the country has recorded an average annual growth rate of 5%.
But the light is red. Excessive credit has its consequences, according to official figures released on Monday, January 3rd. Inflation reaches 36% in a year, more than seven times the government’s original target. The increase in production costs is more than 40% for groceries, as is the case for citizens (+ 86% for oil, + 54% for bread).
The currency has lost 45% of its value since the beginning of the year. This will drive exports and revive the manufacturing industry seized by Covid. But the wealthiest Turks are buying dollars to hedge the devaluation. According to the central bank, more than half of November’s deposits were made in foreign currencies. To calm the fire, Erdogan took out the checkbook on December 20th. (See below).. A few days ago, the dictator had already announced a 50% increase in the minimum wage. This should encourage inflation.
Structural difficulties wall
But there is no doubt that he deviates from that monetary policy. This should not cause embarrassment. “”To export, Turkey must first importElynch Jerdan, a professor of economics at the University of Kadir Has in Istanbul, explains. The country is very dependent on imports: raw materials, intermediate goods, etc. They are funded specifically by relying on accumulated debt from foreign creditors. As a result, this strong growth is based on an unsustainable foundation. »» Debt held by foreign investors makes Turkish debtors vulnerable.
“”Economic growth was driven by good performance in the construction sectorDidier Billion, an iris researcher at the Institute for International Strategic Relations, adds. But this is not enough to be a globalized economy. The basic challenge is to build an efficient industry with high added value. »»
Presidential and legislative elections are scheduled for 2023, but it’s difficult to challenge this headache rush. “Prime Minister Erdogan, who concentrates his power, improvised as the country’s economic leader.Researchers explain. He has already dismissed two central bank executives, including two finance ministers and the governor, in just over a year. »»
Protests are rising over soaring living expenses. How far does the sling go? “At the top, fear is dominant and the government keeps it unobtrusive.Analyze, Erinç Yeldan. How much does the population support protesters? It’s hard to say because the media is controlled and the structure of political opposition is inadequate. »»
Turkish lira crisis undergoes political shift
Following the emergency measures announced by President Recep Tayyip Erdogan, the Turkish lira rebounded strongly last week after a month of historic losses. The Head of State has announced that the value of certain bank deposits in pounds will be linked to the dollar rate. Obviously: The state partially compensates for citizens whose savings are declining. However, many observers have pointed out the risks of this new mechanism and question its sustainability.
One thing is certain: the Turkish lira crisis has undergone a political shift with a call from the new Finance Minister to complain to economists and journalists who have commented on the collapse of their currency. “Complain to everyone who warned that the price of the currency is soaringHe launched.. These have tricked you. »»