What might Turkey's new economic policies look like under a Kılıçdaroğlu government?

What might Turkey's new economic policies look like under a Kılıçdaroğlu government?

According to a report by www.freitag.de, Turkey's weakening economy may have caused President Erdoğan to squander his credit. The ongoing currency decline has led to rising energy prices as energy sources are imported from abroad. This, in turn, has led to increased inflation, a trade deficit and rising private sector debt burdens. Double-digit unemployment is leading to a loss of prosperity and dwindling trust in the government.

Furthermore, the February earthquake exposed government inefficiency, with tens of thousands of people still living in tents and the government only promising to build 300,000 new buildings within a year. In this context, opposition politician Kılıçdaroğlu promises sustainable growth and prosperity. He plans to return to the rule of law, restore trust in the judiciary and the independence of judiciary, fight corruption and ensure greater transparency in public contracts.

Experts agree that Turkey could reach investments of up to 120 billion euros in the next five years if such an economic recovery occurs. If he wins the election, Kılıçdaroğlu plans to return to an orthodox economy with strict fiscal discipline and end the policy of cheap central bank money. In order not to slow down growth, transfer payments are intended to stimulate domestic demand.

Furthermore, the economic policy of the opposition CHP party envisages higher key interest rates, strict tax discipline, technological change and more green energy. This could improve Türkiye's relationship with the European Union. However, a Kılıçdaroğlu-led government would be unlikely to break with current economic policies and continue to encourage external and domestic investment, incentivize export-led growth and advance the use of renewable energy.

A possible impact on the market and the financial sector could be that manufacturers that rely on imported energy, intermediate products and technology would benefit from the new economic policies. Private households in the lower income segment could also be relieved from the appreciation of the Turkish lira and lower energy prices. However, exporters would have to prepare for cuts if the lira were to appreciate significantly. Construction companies that have previously benefited from cheap loans and high demand for real estate could also be affected.

Source: According to a report by www.freitag.de.