Turkey’s largest business group, TUSIAD, on Saturday urged President Tayyip Erdogan’s government to abandon a controversial monetary policy based on low rates that has prompted a crash in the lira, calling for a return to “rules of economic science.”
The lira hit a record low beyond 17 against the dollar on Friday, gripped by fears of an inflationary spiral brought on by Erdogan’s new policy in the face of soaring prices.
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At the low, the currency had lost some 55 percent of its value this year, including 37 percent in the last 30 days.
In a statement, TUSIAD said it had warned the government of the negative impacts of the low-rates policy, adding economic woes were harming businesses and citizens.
“As a result of the instability we have been experiencing in recent times, it has become clear that goals under this economic program that is being attempted will not be achieved,” it said.
“Following steps that were taken within the framework of new economic preferences, an environment of distrust and instability has been created,” TUSIAD said, adding the economic model risked causing “much bigger” problems in the future.
“Even exports, expected to benefit the most from this, have been harmed under this environment.”
Under pressure from Erdogan, the central bank has slashed rates by 500 basis points since September. Erdogan has said the new model will boost exports, employment, and investments, though economists have called his experiment “reckless” as it has sent the lira crashing.
Opposition parties have called for immediate elections and blamed Erdogan for single-handedly causing one of the country’s biggest currency crises. Kemal Kilicdaroglu, leader of the main opposition Republican People’s Party (CHP) repeated that call on Saturday after the lira plunged 8 percent on Friday.
“The dollar is out of control,” Kilicdaroglu said. “If those leading the nation truly love the country, if they respect the people... they will bring the ballot boxes in front of the people immediately,” he said.
Meral Aksener, chairwoman of the opposition Iyi Party, said on Friday that Erdogan had to resign.
“You have no fear of God, we understand, but at least have shame in front of people,” she said on Twitter. “You turned the youth’s hopes into debris... Pull it together! Leave already!”
Erdogan announced a 50 percent hike in the minimum wage, to 4,250 lira ($275) per month next year. That is expected to boost overall consumer price inflation by 3.5 to 10 percentage points, while economists expect inflation to soar beyond 30 percent next year.
Both presidential and general elections are currently due in June 2023.
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