Nov 09 2017

Central bank supporting growth – adviser

Turkey’s central bank is adopting a new plan to support growth and employment, as the nation begins to understand that “belt-tightening” will only bring chaos and crisis, according to a senior adviser to President Recep Tayyip Erdoğan.

The central bank is using various tools to help the economy , aiding Turkey in resisting mounting pressure to introduce orthodox International Monetary Fund-style policies, said Cemil Ertem, Erdoğan’s chief economic adviser, in a column in the Milliyet newspaper today.

It will be some time before the country completely rids itself of old economic theories that have only brought poverty, he said, adding that there were intense efforts to slow down Turkey’s manufacturing-based growth.

Ertem pointed out that he was proven right in 2010 when he predicted that Erdoğan’s growth-based policies would bring economic expansion of 8.9-9 percent.

I heard a chorus of voices saying “what have you done, we shouldn’t grow that quickly, inflation will accelerate the current account deficit will widen … Now, years later, we’re having the same discussions again.

His comments come the day after the government’s statistics office announced that industrial production had risen 10.4 percent from a year ago. The government has been supporting industry with more than 200 billion lira ($52 billion) of loan guarantees. Inflation, however, has risen to 11.9 percent, the highest level since 2008, prompting calls from economists and analysts for the central bank to increase interest rates.

 

CPI and core inflation index (source: central bank)
CPI and core inflation (B) index (source: central bank)

Opponents of the government are trying to pull growth down ahead of the 2019 elections by trying to sabotage its credit guarantee fund, which has been a key driver for growth and manufacturing, Ertem wrote.