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Turkey must avoid recession while fighting inflation, VP says

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Turkey must sustain its push on production and exports to prevent the economy from falling into recession even as it fights inflation, Vice President Cevdet Yılmaz said on Friday, Reuters reported.

After the May elections, President Recep Tayyip Erdoğan’s government launched a U-turn away from unorthodox policies including interest rate cuts that had sparked a lira crisis and sent inflation soaring.

Since June, the central bank has reversed and hiked its policy rate by 900 basis points to address inflation, which leapt to a 25-year high above 85 percent last year and is expected to rise again to a peak above 60 percent in 2024.

Erdoğan said after a cabinet meeting this week that the government will lower inflation to single digits but will not sacrifice economic growth and employment, comments that were echoed by Yilmaz on Friday.

“While fighting inflation we are making an effort to sustain production and exports so as not to fall into recession. We have to do both at the same time,” the vice president told reporters after meeting with bankers in İstanbul.

Yılmaz said the government’s medium-term program, setting out its economic plans in detail, would be announced in the first half of September.

In the meeting with the finance sector the issue of new financial instruments came onto the agenda, with sector representatives having spoken of difficulties in financing long-term projects given the short-term deposits in the sector, he said.

He said the meeting also addressed the issue of encouraging first-time home buyers, adding that the central bank and regulator were working on the issue and that the housing supply needed to be increased.

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