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Turkish business group calls for an end to Erdogan’s low rates policy

Pedestrians walk in the Mahmutpasa district, one of Istanbul’s largest textile shopping malls, near the Grand Bazaar in Istanbul on November 24, 2021.

OZAN ​​KOSE | AFP | beautiful pictures

Turkey’s largest business group on Saturday urged President Tayyip Erdogan’s government to abandon a monetary policy based on the low exchange rate that caused the lira crash, and called for a return to “the rules of economic science”.

The lira hit a record low of more than 17 against the US dollar on Friday after fears of an inflationary spiral caused by Erdogan’s new policies in the face of soaring prices.

At the low end, the coin has lost about 55% of its value this year, including 37% in the past 30 days.

The TUSIAD business group said it had warned the government about the negative effects of low interest rates, and the economic catastrophes that are harming businesses and people.

“As a result of the turmoil we are experiencing in recent times, it is clear that the goals of this effort in economic program will not be achieved,” it said in a statement.

It said “an environment of distrust and uncertainty has been created” and that the economic model risks causing “much bigger” problems in the future.

“Even exports, which are expected to benefit the most from this, are hurt in this environment,” it said.

Under pressure from Erdogan, the central bank has cut by 500 basis points since September. Erdogan said the model would boost exports, jobs and investment, while achieving high growth. Economists have called his experiment “reckless”.

Late on Saturday, the Turkish banking association said Finance Minister Nureddin Nebati had briefed the association, banking supervisor BDDK and state banking regulators on the economic model. new at the talks aimed at discussing “healthy, consistent growth”.

Devlet Bahceli, an Erdogan ally and leader of the nationalist party MHP, dismissed TUSIAD’s “problematic” claims and said the new economic policy would succeed despite a “siege” ” For economy.

But Kemal Kilicdaroglu, leader of the main opposition Republican People’s Party (CHP) repeated calls for immediate elections and Meral Aksener, chairman of the opposition Iyi party, on Friday said Erdogan should step down. .

“You are not afraid of God, we understand, but at least be ashamed in front of people,” she wrote on Twitter.

Several polls have shown support for Erdogan and his ruling AK Party at their lowest level in years. Elections are scheduled for mid-2023.

Erdogan has announced a 50% increase in the minimum wage that is expected to boost overall consumer price inflation by 3.5 to 10 percentage points. Economists expect inflation to soar to more than 30% next year.

Bakery worker Zeki Erdogan said the planned minimum wage increase was not enough.

He added: “It is hard to make a living and pay rent, gas, electricity and water with 4,250 lira per month. “The future is not bright.”

https://www.cnbc.com/2021/12/19/turkish-business-group-calls-for-an-end-to-erdogans-low-rates-policy.html Turkish business group calls for an end to Erdogan’s low rates policy

Emma James

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