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Turkish business group calls for an end to Erdogan’s low-rates policy

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On November 24, 2021, a group of pedestrians walked to Mahmutpasa, Istanbul’s largest textile shopping center, just outside Grand Bazaar.

OZAN KOSE | AFP | Getty Images

Turkey’s largest business association urged President Tayyip Turkey to end a monetary strategy based on low rates. This has caused a crash of the Turkish lira and demanded a return “rules economic science”.

On Friday, the lira fell to 17 against the dollar for the first time in history. This was due to fears that Erdogan’s policy of increasing prices would lead the country into an inflationary spiral.

The currency was at its lowest value, losing 55% and an additional 37% during the previous 30 days.

The TUSIAD business association stated it had warned government officials about the potential negative effects of the policy of low interest rates, as well as that economic troubles were affecting citizens and businesses.

It stated in a statement that “as a consequence of the instabilities we have experienced in recent times it has become evident that goals under this economy program that is being attempted won’t be achieved.”

According to the report, “an atmosphere of distrust has been created and instability has been established” and that the economic model was at risk of causing more problems in the future.

According to the report, even exports that are expected to reap the greatest benefits from it have suffered.

Erdogan’s pressure, the central bank cut rates 500 basis points in September. Erdogan claims that his model will increase exports, investment, and employment while simultaneously achieving high growth. His experiment has been called “reckless” by economists.

On Saturday, Turkey’s bank association reported that Nureddin Nebati, Finance Minister, had met with the group, BDDK’s watchdog on banking, as well as state bank managers, to discuss the proposed economic model in talks about “healthy and consistent growth”. 

Erdogan ally Devlet Bahceli and leader of MHP nationalist party dismissed the “problematic” statement from TUSIAD, and stated that the economic reforms would continue despite an economic “siege”.

Kemal Kilicdaroglu of the Republican People’s Party (CHP), leader of the opposition, called for urgent elections, and Meral Aksener of the Iyi opposition party said that Erdogan had to resign on Friday.

On Twitter, she said, “You do not fear God. However, we can understand your feelings, but you should at least be ashamed in front of others.”

Numerous polls show support for Erdogan’s ruling AK Party and Erdogan at its lowest level in many years. Latest mid-2023 is the date for elections.

Erdogan has announced that a minimum wage increase of 50% will be implemented. It is widely anticipated that this will boost consumer price inflation to 3.5-10%. According to economists, inflation will rise above 30% in the next year.

Zeki Erdogan, Bakery worker, stated that the increase in minimum wage is not enough.

It is very difficult to live and pay rent, gas, electricity and water bills on 4,250 Lira per month.” he said. The future looks dim.

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