Tag : Erdoganomics

Nicosia (Cyprus): Recep Tayyip Erdogan, having succeeded in getting re-elected for a third time as Turkey's President, in the face of the big economic crisis plaguing his country, has given some indications that he may replace his unorthodox economic policies, dubbed by prestigious foreign media as "Erdoganomics", with orthodox economics. But first, let's see what "Erdoganomics" are. According to an explanation of the term given by the Washington Post, it includes erratic management of the economy, coupled with double-digit inflation, fuzzy statistics and departure from a rules-based order. The underlying doctrine is that interest rates are the mother of all evil and cause inflation, though conventional economics says otherwise." As a result of the application of "Erdoganomics", Turkey which in 2014 was the world's 16th largest economy has slipped three places in the relevant ranking and now, according to the World Bank, occupies number 19, with a GDP of US$906 billion, compared to almost US$1 trillion in 2013. Last February's devastating earthquakes that struck Turkey caused the loss of life of about 56,000 people and more than USD 34 billion in direct loses, while reconstruction of damaged buildings will require more than USD 70 billion. The earthquakes have added pressure to an increasingly fragile macro-financial situation. According to financial experts, in the last months before May's elections, the Central Bank of Turkey has depleted all its foreign currency reserves as it tried to prop up the Turkish Lira and in May net reserves reached a record low of negative USD5.7 billion. Erdogan's unorthodox economic policies of keeping interest rates low in order to boost exports, growth and employment have created a serious currency and ...