Turkish economy to enter 'virtuous cycle,' says Erdoğan

Turkish President Recep Tayyip Erdoğan has stated that the country’s economy would enter a “virtuous cycle” and that there was a "high probability" of Turkish lira gaining value in real terms with the disinflation program the government implented.

Wednesday November 22 2023 07:10 pm

Duvar English

President Recep Tayyip Erdoğan on Nov. 22 stated that the Turkish economy would enter a “virtuous cycle” with the disinflation program they implemented.

Answering the questions of the journalists while returning from his Algeria visit, Erdoğan said the period in which the Turkish Lira losing real value “has come to an end. There is a high probability that the Turkish Lira will gain value in real terms.”

“In the coming period, we will gain investor confidence with the sound policies and structural reforms we implement, we also gain trust now. This trust will trigger the flow of funds. The flow of funds will cause real appreciation in lira. This will accelerate disinflation and limit the downside risks to growth. As a result, we will grow at a reasonable level and inflation will decrease under these conditions. So hopefully we will enter a virtuous cycle,” he added.

Erdoğan chose former Wall Street banker Hafize Gaye Erkan as central bank chief after his May re-election. She has led a policy U-turn to relieve an economy strained by depleted FX reserves and surging inflation expectations.

Erdoğan's previous support for low interest rates despite surging prices brought on a currency crisis in late 2021 and pushed inflation above 85% last year.

In past years, Erdoğan has repeatedly slammed tight monetary policy, describing himself as an enemy of interest rates, but he has recently said tight policy will help bring down inflation.

The lira weakened again this summer as the new economic team under Finance Minister Mehmet Şimşek eased the state's grip on foreign exchange markets and moved away from unorthodox policies and regulations.