Given the poor economic situation in Turkey and the political turmoil after the loss of the AKP party of President Recep Tayyip Erdogan in recent local elections, the government wants to promote a reform programme in the case of investors trust.
Finance Ministers and Erdogan’s son-in-law Berat Albayrak presented on Wednesday a long-awaited Plan, which provides for, among other things, a strengthening of the banking sector. Observers spoke of a positive approach, missing but concrete Details. In addition, the political uncertainty in the country continues, because Erdogan does not want to acknowledge the defeat of the AKP in the metropolis of Istanbul.
The Turkey is in a recession. After a decline in economic performance of 1.6 percent in the third quarter of 2018, the economy shrank in the fourth quarter to 2.4 percent. These are the worst Figures in many years. Domestic demand collapsed, the Turkish Lira has lost in the last year, Inflation remains close to 20 percent, and the unemployment is around twelve percent concern. The International monetary Fund (IMF) expects the Turkish economy force this year to 2.5 percent.
fall of the Lira
The strong devaluation of the Turkish Lira makes many companies and banks to create, the groaning under the burden of very expensive become debt in dollars or euros. Albayrak wants to help state-owned banks with government bonds in the amount of approximately five billion dollars; also, private banks should receive the necessary support.
Until the next elections in 2023, Turkey will experience a Phase of economic structural reforms, said Albayrak. He also announced Changes to the tax system. Initiatives in the agricultural policy to reduce Inflation in the food sector. In all of this, the government is going to maintain more fiscal discipline, said the Minister.
The reactions to Albayraks appearance behavior. The Turkish economy journalist Baris Soydan told the news platform, T24, Albayrak had submitted to a program, but not said, how it is funded should be. Cristian Maggio, an expert for emerging markets at TD Securities in London, told the news Agency Reuters, Albayraks promise of spending discipline contrary to his announcement to help the banks with public funds.
Other experts criticized, Albayrak had remained very vague. The economist Timothy Ash spoke on Twitter of a few positive signals. However, Albayrak I called to the little Details. Also the question of whether the Minister had done enough that the escape to stop many of Turkish savers and investors from the Lira into currencies such as the US Dollar. The aversion of the Turks of the own currency had contributed in recent weeks to a new Low of the Lira.
investors ‘ Commitments are, therefore, mainly on the implementation of Albayraks and the political situation look. Erdogan had immediately after the local elections of 31. March of the economic reforms announced. However, the President is faced with a Problem. Reforms to repair the Turkish economy engine could restrict his own Power. The business Association Tüsiad urges not only that the state had to save, and in the technologies of the future to invest. The rule of law should strengthen the independence of public institutions, the fundamental rights of citizens and the rules of the free market.
risk-re-election
When Erdogan should bring such a program on the way, he would have to stay out of this, for example, from the work of the Central Bank. In 2018, the head of state had set the monetary authorities with demands for reductions in interest rates under pressure, and thus make investors nervous. If Erdogan does not get the economy, the AKP at the beginning of your descent, says Gonul Tol Turkey-expert at the middle East centre in Washington, our newspaper in Istanbul.
Currently, Erdogan thinks about a repeat of the local election in Istanbul. The election in March, had introduced the ACP, a historical defeat in the city in which Erdogan 25 years ago his political career began. Istanbul is not only politically, but also economically of great importance: the city on The Bosphorus is the site of 40 percent of Turkey’s economic power and offered to the ACP so far, many options, Items, and boons to followers, and government to distribute close to the company.
Should enforce the ACP, a new vote would be for the economy, highly risky. So the country would give it away in the then forthcoming election campaign, valuable time is needed for reforms. In addition, negative market reactions as well as skepticism of the US and the EU are to be expected in the case of a re-election, said the Turkish economist Emre Deliveli our newspaper in Istanbul.
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Also, the international environment for Turkey is difficult. In relations to the United States, a new crisis threatens, because Erdogan’s government wants to buy against the will of the United States, a Russian missile defense system. In the U.S. Senate is being debated currently due to the detention of American citizens and the Consulate staff in Turkey on sanctions against Turkish government representatives.
