This is how the foreign press saw the Medium-Term Program

After the MTP data was announced, foreign media outlets claimed that there had been sharp changes in Erdogan’s views on monetary policy.

The Medium Term Program (PMP 2024-2026), prepared by the Ministry of Finance and the Presidency of Strategy and Budget, has been announced.

The government, which intends to fight inflation by returning to orthodox policies, cut growth while raising inflation forecasts in the OVP.

Inflation forecasts for 2023 and 2024, which were set at 24.9 percent and 13.8 percent last year in the MTP targets, have been increased to 65 percent and 33 percent, respectively. Inflation is forecast to fall to single digits, at 8.5 percent in 2026.

Economic growth projections, which were previously 5 percent for 2023 and 5.5 percent for 2024, have been lowered to 4.4 percent for 2023 and 4 percent for the next year. Economic growth is projected to rise again to 5 percent in 2026.

Erdogan’s statements defending a strict monetary policy against his thesis of low interest and high growth attracted the attention of the foreign press.

In his remarks on the MTP program, Erdogan said: “With the support of a tight monetary policy, we will reduce inflation to single digits again and improve the current account balance.”

‘ERDOĞAN CAN TEST PATIENCE’

The British news agency Reuters, in the news it prepared for the OVP, stated that “Turkey raised its inflation expectations and lowered its economic growth expectations as it intends to follow an orthodox and realistic political path.”

High inflation, unemployment and low growth could test Erdogan’s patience in turning the economy 180 degrees, with an emphasis on local elections, according to the report. It was also recalled that Erdogan removed four central bank governors in four years.

The following statements were included in the relevant part of the news:

“As the AKP tries to win back Istanbul and Ankara from opposition in March elections, some analysts say high inflation, unemployment and low growth may test the president’s patience with his U-turn.”

Tatha Ghose, an analyst at Commerzbank, told Reuters: “There is always the risk that Erdogan loses patience. “Inflation will be very high for a long period of time, causing second-round effects, such as wage deals,” she said.

EFFECT OF LOCAL ELECTIONS

The US financial agency Bloomberg stated that Erdogan has made a major change in his political stance.

“President Erdogan has made a flagrant reversal of his stance, which has long disappointed investors by advocating ultra-low interest rates, saying ‘tight monetary policy’ is needed to curb inflation,” the report said.

On the other hand, the news reported that the economic outlook in Turkey was pessimistic. In the assessment included in the news, “Local elections are scheduled to be held in Turkey in March. For years, the president has ramped up stimulus money ahead of elections and wants to recapture Istanbul, the largest city currently in opposition hands.

‘ERDOĞAN RETURNED HIS THESIS’

On the other hand, the British financial newspaper Financial Times wrote that Erdogan reversed the thesis that “interest is the cause, inflation is the result”.

President Erdogan, reversing his view that high interest rates cause inflation, has vowed to use monetary and fiscal policy to curb skyrocketing prices.