Albayrak’s ‘new economy approach’ unhelpful to Turkish lira’s free fall

0
Turkish Treasury and Finance Minister Berat Albayrak wipes his face as he speaks during a presentation to announce his economic policy in Istanbul, on August 10, 2018. / AFP PHOTO / Yasin AKGUL

Finance and Treasury Minister Berat Albayrak held a meeting on Friday at Dolmabahçe Palace in İstanbul to announce the policies Turkey would adopt for the new term, called the “New Economy Approach,” promising “decisive and strong steps,” the Habertürk daily reported, but it did little to help the Turkish lira’s free fall.

With Turkey’s prominent businesspeople, chairs of business associations and bank managers in attendance, Albayrak said the current situation in the economy did not match the macroeconomic trends.

“We need to establish an effective means of communication [to explain our economic plan] and manage the economy in good faith,” Albayrak said, adding that the central bank’s independence is an essential component of the new term.

He also pledged to boost trust in the Turkish lira, which has recently plunged to historic lows and on Friday hit 6.70 against the US dollar.

Albayrak’s meeting was scheduled for earlier in the morning, but he postponed it twice during the day and at the opening of the presentation waited for a speech by his father-in-law, President Recep Tayyip Erdoğan, in Bayburt province after Friday prayer to conclude.

As global economists criticize Turkey deviation from orthodox financial policies, Albayrak’s presentation vowed to make structural reforms, maintain budget discipline, battle high inflation rates, lower the current account deficit and implement austerity policies in government spending.

“[Which should we choose?] Lowering inflation or economic growth? [The answer is] both fighting high inflation and maintaining healthy economic growth,” Albayrak said in response to critics, implying that Turkey had chosen to speed up economic growth over high inflation rates.

Prominent Turkish economy pundit Uğur Gürses commented on Albayrak’s speech, saying, “It’s a philosophical talk in the form of a presentation.”

“I’m all for a medium term strategy. But making a speech like Albayrak’s in the midst of a currency free fall without a single concrete measure shows utter lack of comprehension about what’s happening and what’s required,” Dani Rodrik, a Harvard professor, tweeted.

Liked it? Take a second to support Turkish Minute on Patreon!

LEAVE A REPLY