Erdogan Avoids the Turkish Economy

Turkish President Recep Tayyip Erdogan is causing the greatest tragedy a President has ever wrought to date. The policies of the sultan are making water on all sides, both from a diplomatic point of view and internally. Turkey released the anticipated inflation data last week, where the trend growth in September prices remained significantly stable at 11.75%.

It was supposed to achieve a modest acceleration, so the market took it well. In the morning, the Turkish lira gained about 0.20 percent against the dollar, settling at a 7.75 exchange rate. Yet it will lose almost 25 percent this year. On September 29, the tensions between Armenia and Azerbaijan hit a new all-time low, closing the session at 7,8139.

The insane adventures of Erdogan have undermined the central bank’s effort to curb the Ankara currency and the financial crisis. Governor Murat Uysal boosted rates by two percentage points to 10.25 percent two Thursdays ago. As did the shares, the lira signalled a minimal recovery. But President Recep Tayyip Erdogan has always talked of sweeping it all away, helping Baku in the military battles that broke out between the two over territorial claims against the other former Soviet republic.

All of this, even though the Turkish government has already raised tensions with Greece over the waters off Cyprus. And relations are cold with Europe and the USA. Due to Erdogan’s expansionist ambitions in the Middle East, Ankara is poorly accepted by the Chancelleries of the Old Continent and the White House.

At the same time, geopolitics is the power and the weakness of Erdogan, who, having had the undoubted merit of promoting and accelerating Turkish economic growth, is now holding it back.

The Turkish lira plummeted in 2018 to such an extent that a monetary maxi-tightening was required. Rates were increased to 24%, subsidised inflation, and stabilised the exchange rate. But in order to avoid the financial crisis, it was unacceptable for the president to lose a few growth points.

He fired Governor Murat Cetinkaya, also known as “his” man, last summer, rewarding the deputy and signalling that rates could drop. It was rewarding and, in reality, the cost of money has been reduced to a minimum of 8.25 percent in recent months. With the exception of fueling the lira crisis and the rise in inflation with utter global disinflation.

If the price of oil dropped by about 50 percent this year doesn’t matter, because half of this relief was devoured by the Turkish lira ‘s weakness. Oil imports account for around 2.5 percent of Turkish GDP and, while recovering from the lows reached in April, the current account still flies in the deep red.

Only imagine the red has already contributed to 21.6 billion dollars in the first seven months of 2020, 2.9 percent of GDP for all of 2019. It is a symbol of the domestic economy’s non-competitiveness, being incapable of exporting and attracting adequate resources.

The Turkish Lira is one of the most undervalued world currencies, according to the Big Mac Index, which aims to capture equilibrium exchange rates. It is predicted to trade at 2.45 against the dollar, 68 percent stronger than today. All this makes us think that if the opponents on the field have not been able to stop the insane scheme of Erdogan so far, as a sultan, the economy would take care to put an end to his dreams.




Writer. Speaker. Entrepreneur I am a diarist and write story to reflect my thoughts.

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Akshay Prasad

Akshay Prasad

Writer. Speaker. Entrepreneur I am a diarist and write story to reflect my thoughts.

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