Reuters: Erdogan signals u-turn in economy by appointing Şimşek

Reuters: Erdogan signals u-turn in economy by appointing Şimşek


British news agency Reuters described the appointment of Mehmet Şimşek as the Minister of Treasury and Finance as Erdogan’s u-turn in the economy, while analysts emphasized the importance of Şimşek’s independence and pointed out that his independence would be curtailed as the local elections approached.

Reuters: Erdogan signals u-turn in economy by appointing Şimşek

President Recep Tayyip Erdogan announced the new cabinet members at the press conference held at the Çankaya Mansion yesterday.

Mehmet Şimşek, who previously served as the deputy prime minister responsible for the ministry and economy, was appointed as the Minister of Treasury and Finance.

Following the announcement of the new cabinet, the British news agency Reuters published a news titled “Erdogan signals an economic u-turn by choosing the orthodox Şimşek”.

In the news, Erdogan’s appointment of Mehmet Şimşek as Minister of Treasury and Finance was evaluated as a signal that he would return to more orthodox economic policies to deal with the cost of living crisis and other problems in Turkey.

It was also stated in the news that Cevdet Yılmaz, described as “another orthodox economic manager in the new cabinet”, was appointed as the vice president.

While analysts say that Şimşek may pave the way for a rate hike in the coming months, this is seen as a clear return from Erdoğan’s long-standing low policy despite rising inflation.

“The obvious u-turn in the economy came as many analysts said this large emerging market is headed for turmoil, given the depletion of foreign currency reserves, the expansion of the Currency Protected Deposits (KKM) and uncontrolled inflation expectations,” the report said.

THE PROBLEM OF INDEPENDENCE AND LOCAL ELECTIONS

In the news, which reminded that Erdogan had previously turned to orthodoxy and quickly returned to interest rate reduction methods, analysts emphasized the importance of how much independence would be granted to Şimşek.

Emre Peker, director of Eurasia Group, commented on Şimşek’s appointment as minister: “This shows that Erdoğan has realized that confidence in Turkey’s ability to manage its economic challenges has been shaken. “But while Şimşek’s appointment is likely to delay a crisis, it is unlikely to offer long-term corrections to the economy,” he said.

Noting that Şimşek’s authority will be restricted as the local elections approach, Peker said, “Şimşek will probably have a strong authority at the beginning of his term, but will face rapidly increasing political resistance to implement the policies as the March 2024 local elections approach.”

Due to the economic program that Erdogan has implemented since 2021, inflation exceeded 85 percent last year, reaching the peak of 24 years. While the Turkish lira has lost more than 90 percent of its value in the last ten years, after the 28 May elections. dollar/TL exceeded 20 liras, reaching an all-time high.

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