Turkish President Recep Tayyip Erdogan Re-elected
Turkish President Recep Tayyip Erdogan was re-elected for a five-year term last Sunday. During his election campaign, the president pledged billions of dollars and also pumped in tens of billions more to float the Turkish lira ahead of the polls. However, experts believe that the Turkish economy may soon face the truth.
Turkey’s Economy and the Challenges it Faces
Turkey’s economy suffers from a problem unique to the executive branch itself. Although backed by cheap labor and an efficient banking system, the country’s manufacturing sector has been dominated by its low interest rates as opposed to other countries. In order to address this issue, President Erdogan changed the governors of the central bank.
The Decrease of the Turkish Lira
On Tuesday morning, the Turkish lira continued to fall reaching 21.69-per-euro with its price at $20.44. Experts have offered two solutions: raise interest rates or let the lira fall. However, since monetary support measures have eliminated low interest rates benefits in Turkey’s manufacturing sector, experts believe that a “return to the floating exchange rate regime will be necessary to restore the competitiveness of Turkish exports”.
The Reconstruction of Turkey
In parallel to these economic challenges, Turkey must also focus on financing the reconstruction of the provinces affected by the earthquake of February 6. The earthquake killed 50,000 people, and the damage is estimated at over one hundred billion dollars.