Erdogan puts economy first

Turkish President Recep Tayyip Erdogan has started his re-election campaign with a vow to cut inflation to single digits and increase economic growth in a bid to extend his 20-year rule. Erdogan’s Justice and Development (AK) Party has faced the most significant political challenge since it took power in 2002, as polls indicate that support has weakened in recent years. Erdogan’s economic policies have been blamed by his critics for the sharp decline in the value of the Turkish lira and the soaring inflation rates.

Despite criticism of his economic policies, Erdogan has continued to champion investment, production, exports, and eventual current account surpluses as the drivers of Turkey’s gross domestic product. Speaking at an Ankara stadium on Tuesday, Erdogan repeated his mantra and said, “We will bring inflation back down to single digits and definitely save our country from this problem.”

The ruling party manifesto has promised further investment improvement with a free-market economy integrated with the world. It targets annual growth of 5.5% from 2024 to 2028 and aims to reach GDP of $1.5tn by the end of 2028. In 2022, Turkey’s GDP was just over $1tn.

Erdogan has called for aggressive interest rate cuts, which have been carried out by the Central Bank of Turkey. These led to a peak in inflation of over 85% in October, before dropping to near 50% in March. Nevertheless, the resulting cost-of-living crisis has put immense pressure on Turkish households, reducing their purchasing power.

The President recently stated that his team, under the guidance of former Finance Minister Mehmet Simsek, was working on strengthening economic policies. The manifesto, however, does not make any direct reference to returning to orthodox economic policies. It argues that a low-rate policy is the primary driver of entrepreneurs investing in the real estate sector and creating jobs.