President Recep Tayyip Erdoğan, who made a speech after the Cabinet meeting Monday evening, touching on almost every topic on the agenda, including the coronavirus pandemic, shared the following data with respect to the economy:
“Appreciating 18 percent against the dollar, and 16 percent against the euro, the Turkish lira showed the best performance among developing countries. The Turkish lira is not depreciating but rather appreciating. The strengthening of the Turkish lira and the decline in gold prices reduced our total central government debt stock by almost 163 billion liras.”
This speech was made on the first day of the week. Then, by 3:15 p.m. on Friday, the last day of the week, $1 dropped down to TL 7.7. In other words, there is no harm in rounding off the recession in the last three months as 20 percent.
The dollar depreciating 20 percent does not only mean that the Treasury’s dollar debts are reduced about 200 billion liras. As this has a direct effect on the products in the inflation category as well, it can be safely said that the drop in foreign exchange rates contributes positively to the fight against inflation.
The rapid decline in foreign exchange rates, Turkey taking top position as one of the countries whose currency appreciated the most among developing countries, also indicates that the “confidence” factor in the economy has started to gain strength.
Taking an important decision in January, the Turkish Statistical Institute (TurkStat) established a new department called the Price Statistics Advisory Board. The board will include academics working in the economy field, as well as representatives of civil society organizations and relevant public institutes. The establishment of such a board reveals the intent to increase the economy management’s “predictability” regarding the economy, and to use the vastest advisory mechanism.
The statements Treasury and Finance Minister Lütfi Elvan posted on his social media account a few days ago, providing data, which will allow us to have an idea both in terms of being realistic and what actions will be taken in the management of the economy.
Let us take a look at that post:
“The figures revealed show we are far from the inflation goal. In order to achieve our goal, we will never compensate our measures. We will act with the advisory mechanisms including all parties. Quality and sustainable growth is not possible without price stability.”
FOREIGN EXCHANGE DEPOSITS DECLINE FOR FIRST TIME AFTER A LONG BREAK
According to the information we received from economy groups, banks in Turkey saw a decline for the first time last week in people’s foreign currency accounts. Foreign currency accounts that broke another record in December following November, regressed last Thursday for the first time from $265.4 billion to $264.3 billion. Of course, a $1.1-billion decline is insufficient in terms of proportioning by percentage. However, a decline trend in foreign exchange deposits is important rather than the figure. The Central Bank’s reserves simultaneously saw small-scale increases as well. Gross reserves rose $2.2 billion, bouncing up from $93.3 billion to $95.5 billion.
Economy groups briefly said in regards to the signs of easing in the economy following the record high in foreign exchange deposits, “In order for it to drop, everybody needs to believe it,” summarizing the situation. One other valuable comment from these groups is, “Price stability is priority. Nothing will happen without that.”
RELATIONS WITH US, SIGNS OF SMOOTH START
Everybody knows about how susceptible the markets are to Turkish-American relations. Contrary to expectations that Turkey’s relations with the U.S. may sour upon Joe Biden’s inauguration as president, the initial signs indicate a “smooth start.”
The information we reached in relation to the content of the one-hour meeting between Presidential Spokesperson İbrahim Kalın and White House National Security Advisor Jake Sullivan, which is considered the “first official contact,” indicate that this meeting took place in a highly positive atmosphere.
We have information that the meeting was positive and comprehensive, and that an agreement was reached with respect to minimizing differences of opinion concerning bilateral relations and regional matters, as well as strengthening common interests and common perspective.
According to the information obtained from sources:
- Sullivan told Kalın that Joe Biden visited Turkey on four occasions, that he knows President Erdoğan, that he is well aware of Turkey’s importance, and that he wants to work closely with Erdoğan.
-There is also information that there will shortly be a telephone conversation between Erdoğan and Biden.
If relations with the U.S. become “foreseeable” even if not repaired, this will surely be good news for the economy.