Turkey heading towards “economic collapse”
Turkish President Recep Tayyip Erdogan said his country could face serious problems unless the central bank is fully reformed, just days after its governor, Murat Çetinkaya, was replaced.
The Turkish newspaper Hurriyet quoted President Erdogan as saying in a meeting with members of his party in parliament that he had dismissed the central bank governor for refusing the government’s repeated demands to cut interest rates.
“We’ve told him repeatedly during economic meetings that interest rates should be cut”, Erdogan was quoted as saying.
We’ve been told that a rate cut will help reduce inflation.
Didn’t do what was necessary”.
Meanwhile, a global investment management group has revealed that Erdogan is risking an economic collapse, similar to that in some Latin American countries under populist regimes.
Ashmore, the London-based Ashmore Group, said that although the Turkish economy is more diversified than its oil-dependent Venezuelan counterpart, Turkey is currently on a path towards “the damage”.
The Turkish economy is in dire straits.
In 2019, it saw its first recession in 10 years.
Inflation was 20 percent, while the Turkish lira lost about a third of its value against the dollar in 2018.
The number of the report “mistakes” carried out by the government of Erdogan, and may cost the country a lot in the future:
- Instead of identifying the causes of the underlying economic problem, the Turkish government decides to confront the symptoms of the problem, such as inflation, slowing growth and weak currency.
- Erdogan’s government has led bad monetary and foreign policies, failed to develop domestic markets and improved saving rates.
- The Turkish government always blames the other instead of itself, which makes investors and companies in a situation of concern, considering that Erdogan will need more “scapegoats” to suspend the economic deterioration of them.
- As the economy recedes, investors begin to take action to defend their wealth, leading to capital flight and falling investment rates.
The report concluded “In the end, the Turkish government will not find other sources to finance its projects and improve its growth rate, which means it will plunge into crisis”.
