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AKP city council member unwittingly admits Turkey’s economic instability

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A member of the Çorum City Council from the ruling Justice and Development Party (AKP) talked about the instability and unpredictability of Turkey’s economy with another member during a meeting, without realizing his microphone was still on, local media reported on Friday.

A video released on Turkish media on Friday showed İsmail Bölükbaş saying to Muhammed Murat Kılıçlı, another city council member, that nobody in Turkey currently wanted to do business with the government, and even with private sector actors, due to economic instability.

“Here’s the thing. Nobody wants to do business [right now]. You’re in this, [so you know about it]. It’s not certain what will happen [with the Turkish economy]. … I wouldn’t do business with the government. It doesn’t make sense to even do business with private [sector] actors,” Bölükbaş is heard saying.

According to a recent survey conducted by the Ankara-based MetroPoll, more than 75 percent of Turks have said their confidence in the ruling AKP’s economic policies has decreased over the last year.

The survey revealed that 36.4 percent of AKP voters and 50.7 percent of supporters of the far-right Nationalist Movement Party (MHP), an election ally of President Recep Tayyip Erdoğan’s AKP, were among those whose confidence in the government’s economic policies had decreased in 2021.

Data from the Turkish Statistical Institute (TurkStat) also revealed in late December that the country’s economic confidence index tumbled 1.8 percent month-on-month in December to 97.6 points, the lowest figure since May.

The results of the survey and the index come after Erdoğan on Dec. 20 unveiled an emergency plan to help the Turkish currency curb losses which stipulates that the country’s treasury will make up for losses incurred by holders of lira deposits should the lira’s declines against hard currencies exceed bank interest rates.

The instrument will apply for individuals holding lira deposit accounts with maturities of between three and 12 months. The minimum interest rate will be the central bank’s benchmark rate, and no withholding tax will be deducted.

Although the president’s announcement sparked a sharp 50 percent rally in the lira against the US dollar, the currency then started to sink again within a week.

The lira, by far the worst performer in emerging markets in 2021, as well as in the last few years, which lost 44 percent of its value against the US currency over the year, tumbled 5 percent in the first week of 2022, weakening as far as 13.89 against the dollar.

Meanwhile, Turkey’s annual inflation rate surged to 36.08 percent last month, its highest in the 19 years that Erdoğan has ruled, exposing the depths of a currency crisis engineered by the president’s unorthodox interest rate-cutting policies.

Urged to do so by the president in his bid to boost economic growth through higher production and exports, the central bank has lowered its policy rate by 500 basis points to 14 percent since September.

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