Column: Turkey fights for regional elections, will embark on wrong economic policy


The United Nations president, led by President Erdogan, of the United Nations regional election in Turkey on Jan. 31, and the Party of Fair Development (AKP), should press for increasingly misguided economic policies. Instead of drastic and long-term reforms that investors want, there is a growing possibility of choosing first-aid in the short term.

The president of the United Nations, led by President Erdogan, of the United Nations regional election in Turkey on April 1, fights and the president is likely to push for an increasingly misguided economic policy. Proponents looking at the poster of President Erdogan on March 31 in Istanbul (2019 Reuters / Kemal Aslan)

Turkey's economy posted negative growth for the second consecutive quarter from the end of last year, and although the inflation rate has fallen more than 5 percentage points from last year's peak, it is still close to 20%. Families struggle with high prices, and companies shout as central banks have implemented interest rates to contain inflation and restore confidence.

Public dissatisfaction with the economy seems to have increased support for the opposition.

Foreign investors are also dissatisfied with current economic policies. Investors want the Turkish government to increase private sector investment, reduce budget deficits and allow the central bank to work freely. President Erdogan announced on Dec. 31 that he had decided to pursue economic policy without sacrificing the free market. But Erdogan's words and actions have shown a loophole from time to time.

The Turkish authorities have chosen not to be the cause of the currency fall, but to choose a coping treatment that suppresses the short sale. Some analysts see this as a moderate version of capital control. On the other hand, bank supervisors suppress the banks' investigations. Erdogan developed the argument that high inflation would continue if monetary policy were not alleviated on day 29 and urged the central bank to cut its interest rate again. This will put Lyra under pressure again.

Therefore, the central bank fell into a trap. The rating agency Moody's pointed out on 1 that the decline in foreign currency reserves in Turkey is negative for the credit rating. He also stressed that the use of foreign exchange reserves by the central bank to support the purchase of lire raised questions about the central bank's transparency and independence. But the rate hikes are politically difficult and will put pressure on the already slumping economy.

Erdoan had a history of choosing market policy for political purposes and choosing a policy of rapid tracking. History may be trying to repeat.

● Background news

* The Turkish National Unification Regional Elections held on 31 were defeated for the first time since the 2001 reunification of the country's AKP, led by President Erdogan, in the election of the mayor of the capital Ankara. The mayoral election of the largest city in Istanbul is also recessive.

Moody pointed out on Tuesday that Turkey's central bank has backed the purchase of foreigners using lira reserves raised questions about the transparency and independence of the central bank.

* I am a columnist for Reuters Breakingviews. This column is written based on the author's personal opinion.

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