Reuters: Rubble awaits election winner, 2023 looks lost

While Turkey is expected to take time to recover from the damage left behind by the economic policies pursued, which has seen record levels of inflation in the past two years and the TL has lost almost 60 percent in value, 2023 seems likely. be a wasted year, regardless of who takes power.

The opposition and some economists have long emphasized that the process in which the CBRT is shaped according to the ideological approach on which President Tayyip Erdoğan bases Islamic rules on interest rate decisions must come to an end and that it is imperative to take into account the realities of the economy rather than the ideological approach.

Erdogan’s statement that he sought help from Mehmet Şimşek, the internationally recognized former economy minister, was interpreted as a sign that the government was dissatisfied with the policies implemented in the economy, although it was not clear what kind of position he would hold. be or what Şimşek was planning.

Before the elections, Erdogan had declared in April that he was working on his party’s economic policies under the coordination of Şimşek.

Although it is not clear who will make up the economic team if the National Alliance, which represents the opposition, wins the elections, all agree that orthodox views will be adopted instead of current policies.

In a statement on Sözcü TV, Ali Babacan, one of the former finance ministers, who is part of the Nation Alliance, said: “Our main goal is to fight inflation. Our lead institution here is the Central Bank, but we need to work in harmony with fiscal policy and banking policy… with that effort. Our main objective is to reduce (inflation) to single digits as soon as possible”, indicating that the Central Bank will recover its previous powers.

As a result of Erdogan’s unorthodox political approach, including massive rate cuts in the face of rising inflation, the economy and markets came largely under state control. With the initiation of these policies, a large number of foreign investors have left the Turkish markets in the last five years.

Economist Mahfi Eğilmez said, “In addition to economic ruin, there is also social and political ruin,” in the article he posted on his blog on May 5, that the budget deficit could rise to 1.5 trillion lira even if there is no decrease in income, if interest rates continue to remain low compared to inflation. He said that inflation, which had started to decline due to the shock of the Turkish economy, could start to rise again and end the year at around 50 percent.

“The political power, with various maneuvers, managed to hide this disastrous shipwreck until the elections. Eğilmez said: “Many people think that the situation is good” and made the following assessment in the article of him:

“If power changes hands, the newcomers will take over this disastrous landscape. And if they don’t explain this to the public, it will be assumed that they created the remains. If power does not change, it will be the first time in our history that a political power has delivered a great shipwreck.

SOURCES OF POWER AND OPPOSITION: 2023 LOST YEAR

A senior Nation Alliance official, speaking to Reuters, asserted that the CHP and the Good Party will lead the economy, saying: “There is a very serious job to be done in the bureaucracy. Right now it is on hold. However, it has become clear that 2023 will be a lost year. Erdogan is using all the state means at his disposal. Naturally, we say what we can do.”

The same source, who said that Kılıçdaroğlu was interested in economic management training firsthand, said: “But 2024 is not a year to miss. Working on a program. We are focusing on a program that will grow 5% for two years in a row and a little more next year. Serious negotiations are underway with foreign investors. Negotiations were held to provide a very serious resource. We are in contact with all parts of Europe, the Far East, Asia,” he said.

Another Nation Alliance official said: “One thing is certain, we are taking care of the rubble. It will be an economic policy compatible with the world. Orthodox politics will return. Freak’s current policies will be dropped instantly anyway. Yes, this year, the economy can only see the damage and take some action. However, inflation and growth are, of course, among the priority objectives. It will only take the beginning of 2024 for the economy to start picking up,” he said, adding:

“We see this year as a year of repairing damages. It takes time, there is no magic wand.”

In a report published last month, Citi said a return to conventional policies in the economy could mean a CDS decline of 250 basis points and foreign capital inflows of $45 to $50 billion in 12 months.

An AKP official also stated that it was a difficult election period, saying: “Both parties are naturally trying to increase their power in the field of economy. The state of the budget is not very good, I admit. Election years are tough. Yes, this year will be like a lost year, ”he said.

Saying that he hopes the new era will start as the People’s Alliance, the same official said: “I think Şimşek will come. He will support. I have no doubt about it. I 100 percent believe that if Şimşek comes, there will be a very serious inflow of foreign currency.”

“I am confident that we will enter 2024 with a stronger economy. All the economic indicators, including inflation, will be completely different.”

“RAPID INCREASE IN INTEREST”

Bilge Yılmaz, head of economic policies for the Good Party, stated that if they win, the top executives of the Central Bank, including the entire monetary policy board, will change and approve a three-month inflation targeting program. and make a quick interest rate increase.

Stating that it is necessary to be very clear who will lead the economy team and what kind of policy will be implemented, Yılmaz said, “We cannot be in uncertainty.”

Foreign investors visited Turkey in recent months, thinking that it might be a good opportunity before the elections to increase their positions in Turkey, which have been reduced considerably in recent years and have even almost reached zero in the US-denominated bond market. TL.

With the growing belief that there will be a change in policies implemented after the elections, international investors are preparing to invest in Turkey, especially mergers and acquisitions. (Reuters)