Turkish economic woes come to no end!
Turkey joined Mali and Jordan as the new entrants into the grey list of the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog. The statement released by the FATF Secretariat, based out of Paris, France, highlighted eight points of deficiencies including targeting money laundering, non-adherence to UN sanction regimes, discrepancies in abuse of terror financing by non-government organizations, etc.
Turkey’s President Recep Tayyip Erdogan has envisaged the country’s place at the crossroads of the Middle East and Europe as a center for both, economic and political power. Some analysts have crowned this vision of Erdogan as ‘neo-Ottomanism’, a quest of a modern Turkey to relive the glory days of the erstwhile Ottoman Empire, which was founded by the Turkoman tribal leader Osman I.
In September 2021, rate cuts orchestrated by the Turkish central bank added further tensions over the country’s economy, which were then exacerbated even more with further rate cuts this month, as the government battled with soaring inflation. The economy during the pandemic has seen upward swings as well, but it being erratic, both from the perspective of policy and polity, has spooked international and domestic investors alike. The Turkish central bank itself is being seen as an example of the tussles between Turkey’s economic autonomy. The central bank itself has seen three governors being changed along with four statistical institute chiefs since 2019 due to political interference. Turkey’s current Central Bank Chief, Sahap Kavcigolu, who took charge in March 2021, is now reportedly also facing the President’s anger.
Turkish Economy was already shattered by the fallout in the Global Tourism industry due to Covid 19 pandemic. The Turkish economy over the years has faced severe challenges led by economic overheating, a currency crisis, shaky morale of foreign investors, and lack of transparency and autonomy. Since the end of 2012, the Turkish lira has lost more than 80% of its value, the worst slide in the developing world after the Argentine peso. In its failed attempt to prop the lira up, Ankara opened its foreign currency purse and blew through more than $128 Billion in foreign exchange reserves, which many respectable economists now believe to be in the negative.
Inflation neared 20% in September. According to Turkey’s largest trade union, more than 7 million minimum wage earners face extreme starvation. Polls show that almost 2/3 of the Turkish public is struggling to make ends meet. Turkey’s best and brightest are emigrating in flocks, even though the labor minister thinks they’re leaving not because there’s anything wrong in the country but because they’re adventure seekers.
Now only time can tell whether the Turkish Government can bring an end to the economic catastrophe in continuity!
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