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The Turkish lira depreciates, prices rise. The Turkish economy is facing a serious collapse, warn experts. But President Erdogan wants growth at all costs. He wants even more control, says Deutsche Welle.
At least the "potato crisis" seems to have been overcome, potato prices have gone down. Until recently, a kilogram of potatoes cost seven pounds, four times more than last year. Onions, tomatoes and other staple foods have also increased.
Today, inflation gives birth to many Turks, it is felt everywhere: the market, the gas station, rents. "It's getting more and more expensive, I can not afford to spend a lot of time talking," a customer in Istanbul's Shishli district complains. There is everything here: artichokes, fresh mint, watermelons, grapes, figs – which still produce farmers in the area. The badortment is rich, but prices are constantly changing. "Many food products are now worth twice as much, and the government is guilty, it must finally act," said a man from the nearby stand. the economy grew by 7.4% – higher than the Chinese economy. But while the balance of payments deficit is increasing, since the beginning of the year, the Turkish lira has lost more than a fifth of its value against the dollar and the euro and the Inflation reached a record level of 15%. The economic situation is worse than in many years. The recent rating agency Fitch has once again lowered Turkey's credit rating – from BB + to BB, alongside Guatemala and Costa Rica.
President Erdogan is not interested in the ratings of international rating agencies. After his reelection in June, he is stronger than ever – he is at the same time a chief of state, party and government and promises his country a glorious future. "Our economy is on the right track, everyone can see how we invest," the Hurriyet newspaper recently cited. Turkey will soon be "one of the top ten economic powers in the world," Erdogan said after swearing in as president of the country.
Even during the pre-election struggle, Turkey's monetary policy would be further controlled. Depositors are particularly afraid that the Turkish central bank will lose its independence. Last week, Erdogan issued a decree allowing him to appoint the head of the bank and his deputy alone. "The Central Bank has long done what Erdogan wanted, like any other institution in this country, nothing has been decided without his approval," said economist Attila Yeslada. If the bank was still independent, it would raise interest rates four years ago to stop inflation, he added.
Economists believe that rising interest rates are an important measure for stabilizing the currency – according to its own economic theory. Erdogan's higher interest rates are the "root of every evil" and threaten economic growth. (19459003)
Erdogan's tendency to make all his choices in one way brings profound uncertainty to the markets. The trust must regain the new finance minister and treasurer – Berat Albayrak, 40, who is Erdogan's brother-in-law. He pursued economic studies in Istanbul and the United States, was energy minister in the last cabinet. However, he is a relatively inexperienced politician, to whom Erdogan now gives a key position. The chief economist was former Deputy Prime Minister Mehmet Shimsek. He continued as an advocate of investment and for a man who still dares to oppose Erdogan.
Abairak promises fiscal discipline, structural reforms, the independence of the central bank and measures against inflation. "Under normal circumstances, I would say: give him time to prove what he can," says badyst Attila Yeslah. "But now the circumstances are anything but normal, and in times like today we need experienced pilots on the wheel."
According to the expert, in the fourth quarter of 2018 the Turkish economy will shrink, unemployment will rise from 10 to 12%, the pound will continue to depreciate and many medium-sized companies in the sectors of energy, retail and construction will go bankrupt. "This is also not without consequences for Europe, because many Turkish companies are heavily indebted to European banks," said the expert.
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