(from Article by Güldem Atabay with original content on below link)
Erdogan’s preferences will leave Turkey with the risk of a major systematic economic crisis. Every day he resists the calls for early elections and tries to hold the elections in June 2023, the consequences of the path he has chosen will hit him, more.
Before coming to the big economic mistakes in the statements President Erdogan made after the cabinet meeting yesterday, There are a few words to say: It is not rational for him to point out the spring months of 2022 by saying “we will relax in a few months” relating to what he called the economic liberation war, after 20 years.
The reason is the course Erdogan has chosen will leave Turkey with the risk of a major systematic economic crisis. Every day he resists the calls for early elections and tries to hold the elections in June 2023, the consequences of the path he has chosen will hit him, back. Because with the current economic policies, leave alone seeing a relief in the spring of 2022, the pains of this change will be increasingly felt even in June 2023. On this basis, the “reverse reform attempt” will only result in the acceleration of Erdogan’s vote loss, which is reflected in the polls. On the other hand, the Turkish economy will move to a very bad balance, from which it will have great difficulty to recover, for many years.
SO, WHAT RISKS DOES TURKEY FACE?
- More inflation, deeper poverty and queues of shortages formed during periods of currency crisis.
- Dollarization will accelerate with the accelerated depreciation of the TL, accompanied by interest rate cuts that seem to continue beyond December.
- There will be a sharp deterioration in the balance sheets of companies whose expenses and purchases of raw materials are in dollars.
- Deterioration of bank balance sheets and more unemployment…
- Increase in loan interest rates while trying to reduce interest rates. Increase in Treasury’s bond borrowing rates. In the last four months, the policy interest rate has decreased by one point, while the five-year bond interest rates have increased by one point. The negative growth of this process by feeding on the crisis of confidence that will become acute and deterioration in public finances. Exponentially increasing interest payouts.
- The possibility that the foreign currency deposit holders enter the cycle of withdrawing deposits from banks and physically taking their money to the safe deposit box. Bank bankruptcies…
- More unemployment. Deeper crisis. Greater poverty.
- Impoverishment will hit domestic demand causing economic contraction. The policy of keeping labor cheap with impoverishment, the conscious policy that emulating China’s cheap labor will create competitiveness causing the people to continue to remain poor…
- With the ending of limited export growth based on “competitiveness coded according to weakness of TL”, currency crisis will prevail, followed by economic contraction, during which imports will also begin to contract.
With this policy of Erdogan, with this incomplete understanding of the economy, there is no chance for Turkey to “get on the right track” in a few months and not even in a few years, if this path is continued. On the contrary, the country has now come face to face with the risk of losing decades by entering an economic crisis on a scale unprecedented in its history.
ORIGINAL ARTICLE by GÜLDEM ATABAY (link below) – “Excerpts” from the article translated and shared by BTT. LINK: politikyol.com/erdoganin-hayalleri-turkiyeyi-tarihinde-gorulmemis-olcekte-bir-ekonomik-krize-goturecek/
