Shall I reword the following text: „Turkish President Recep Tayyip Erdoğan: Departure from his unorthodox economic policy?“
Foto: ADEM ALTAN / AFP
The country of Turkey is currently facing a severe currency crisis. The value of the Lira has significantly decreased, and inflation is at an alarming rate of 58.9 percent. However, the World Bank has announced its intention to support the country by increasing its billion-dollar aid. Humberto López, the director responsible for emerging economies, stated to the Turkish state news agency Anadolu that an additional $18 billion should be provided to Turkey within three years. Turkey is the largest economy in the Middle East, excluding resource-rich countries like Saudi Arabia.
Diese kämen zu den ohnehin bereits vorgesehenen 17 Milliarden Dollar hinzu. Die Mittel sollten unter anderem für Direktkredite an die Regierung zur Stützung des Privatsektors verwendet werden. Dieses nunmehr auf insgesamt 35 Milliarden Dollar aufgestockte Paket sei eine Reaktion auf das »starke Engagement« der Regierung in Ankara, für gesamtwirtschaftliche Stabilität im Land zu sorgen.
Erdoğans neues Team
The World Bank is referring to a change in direction that Turkey has made in its economic policy. Until the presidential elections in May, President Recep Tayyip Erdoğan had been fueling lira depreciation and inflation with, to put it mildly, unorthodox approaches in monetary policy. However, after the election, he appointed a team of internationally recognized economic experts, including Finance Minister Mehmet Simsek and Central Bank Governor Hafize Erkan.
The goals of the World Bank, located in Washington, include combating poverty and promoting economic development, such as through the provision of affordable loans. Despite currency crisis and high inflation, the Turkish economy performed surprisingly well in the spring. The gross domestic product (GDP) increased by 3.8 percent from April to June compared to the same period last year.
The high growth was also contributed by government incentives before the election in May. It increased the minimum wage and allocated record amounts for social welfare. As a result, Turks consumed more, which boosted the economy. Additionally, the central bank has now started to raise interest rates in the fight against inflation, instead of lowering them as per prevailing economic doctrine. The value of the Turkish Lira has plummeted by around 70 percent against the dollar in the past two years. This makes imports more expensive for the resource-poor country and contributes to high inflation, which diminishes purchasing power.