Analysis of Bloomberg’s ‘growth figures’: May alarm Erdogan

While the 0.1 percent contraction of the Turkish economy in the third quarter of 2022 compared to the previous quarter is seen as a sign that the economy has started to freak out, the issue has also entered the press agenda. international finance.

In the news titled “Turkish economy faltered, there is a greater risk of decline before the elections” published in the American financial agency Bloomberg by Barış Balcı, it was stated that the inflationary crisis in the country began to damage the economy.

According to data announced today by TurkStat, the Turkish economy increased by 3.9 percent in the third quarter of the year compared to the same quarter of the previous year. The economy contracted 0.1 percent compared to the previous quarter. Thus, the Turkish economy contracted on a quarterly basis for the first time after 9 quarters.

‘ERDOGAN CAN ALARM’

While it was claimed in the news that the Turkish economy had the worst growth performance since the global epidemic in 2020, it was claimed that these data may alarm President Recep Tayyip Erdoğan ahead of next year’s elections.

The article stated that the loss of dynamism in the economy explained the urgency of the interest rate cuts carried out by the central bank since August. The analysis also said: “The unorthodox approach also fuels inflation, which is increasingly damaging to the economy.”

The news highlights that Erdogan, who wants to be re-elected next year, advocates an economic model that prioritizes exports, production and employment to the detriment of price stability and the currency, while recalling that Erdogan pressures the central bank for single-digit interest rates.

‘INTEREST REDUCTION DID NOT WORK’

In the Bloomberg news, it was claimed that despite all these developments, four consecutive interest rate cuts so far have failed to rev up the economy.

“Businesses and consumers are proving less immune to the ravages of inflation after a post-pandemic period in which Turkey’s economic growth topped 6 percent per quarter for two years,” the analysis said.

RISKS IN EUROPE THREATEN EXPORTS

It was stated that Erdogan’s goal of increasing exports is at risk given the appearance of the threat of recession in Europe, and it was emphasized that growth will depend on strong domestic demand and investment in the coming months due to the slowdown in exports. .

In the analysis, it was noted that the government is likely to take various measures to stimulate the economy before the elections that should take place until June. “The much-anticipated increase in the minimum wage may give households a breather against inflation,” the report said.

‘INFLATION REMAINS A BIG CONCERN’

Finally, comments from experts were included in the news. Bloomberg economist Selva Bahar Baziki made the following assessments on the subject:

“Even when growth slows, inflation will continue to be a bigger concern for the economy. The Central Bank’s loose monetary policy stance will hurt the LT and fuel inflation. We see expansionary policies increasing demand and increasing price increases until the elections to be held in mid-2023.”

QNB Finansbank Chief Economist Erkin Işık said that net exports had a negative impact on growth in the third quarter and that one of the biggest obstacles to growth came from investments measured by capital formation. Işık also noted that there was a positive surprise from government spending in the third quarter.