Mehmet Şimşek comment from foreign experts: Will there be a U-turn?
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Foreign experts, who welcomed Mehmet Şimşek’s takeover of the economy with interest, are undecided as to whether this is a return to orthodox economic policy or a symbolic appointment. Here are the opinions of analysts working in international financial institutions…
Foreign market experts welcomed the appointment of Mehmet Şimşek with interest.
President Tayyip Erdogan announced the new cabinet over the weekend. Mehmet Şimşek was appointed as the Minister of Treasury and Finance, while Cevdet Yılmaz became the Vice President.
The government’s interest rate cuts, investment-oriented credit and current account surplus policy, which started in September 2021, did not lead to a current account surplus, and increased inflation to the peak of 24 years. This policy caused a sharp decline in purchasing power and foreign exchange reserves in the country.
In his first statement after taking office, Şimşek said that “Turkey has no choice but to return to a rational basis”.
AKPIn order to signal a change in the economic policies of .
Foreign analysts stated that the policies should be examined and it should be monitored whether Şimşek’s appointment was more than a symbolic appointment.
Here are the opinions of foreign experts:
WILL THERE BE A DRAMATIC U-TURN?
According to CNBC, USA Wolfango Piccoli, co-chairman of Teneo-based consulting company, said that with Şimşek’s return, Turkey’s current economic policy may be partially reorganized.
But Piccoli added that a dramatic U-turn taking a purely traditional monetary policy approach is unlikely.
“It is also unclear how long Erdogan can tolerate a pragmatic stance on the economic front,” Piccoli wrote in a June 2 research note. The appointment of Şimşek is an instrument that Erdoğan uses until the markets give Turkey some respite,” he said.
‘ŞİMŞEK APPOINTMENT WILL SUPPORT THE MARKET’
Markets are increasingly pricing Erdogan’s return to orthodoxy, according to Citigroup analysts, including Donato Guarino, as quoted by Bloomberg.
Analysts, in the report they wrote last week, stated that they remained skeptical about the medium-term expectations regarding the Turkish economy, and pointed out that Şimşek’s appointment would provide support to the market.
SOCGEN: MONETARY POLICY TO BE REVISED
French bank SocGen analysts, including Marek Drimal, said in a report published on Friday, “We expect Şimşek’s appointment to lead to an overhaul of monetary policy in Turkey.”
Analysts said, “The new monetary policy is to limit domestic credit expansion and vote It will aim to rebuild the foreign exchange reserves that were depleted by the pre-intervention.”
Drimal also stated that the appointment of Şimşek could prevent the selling wave in TL and predicted that the Central Bank could increase the interest rate by 650 basis points within two months.
WILL LIGHTNING GET RECOVERED FROM OTHER EFFECTS?
Bank of Singapore analyst Todd Schubert said, “Mehmet Şimşek has great credibility in the eyes of the global investor community. The question, of course, is how long Lightning will recover from other effects,” he said.
Henrik Gullberg, macro economist at London-based Coex Partners, said that Şimşek should be shown to the markets that he is “more than a symbolic appointment made to address the post-election markets”.
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