As President Recep Tayyip Erdoğan of Turkey shifts towards conventional economic policies, the recent termination of a $5 billion deposit agreement with Saudi Arabia highlights the country’s progress in rebuilding its foreign currency reserves. The move signifies a positive turn in Turkey’s $1 trillion economy and a step towards achieving its economic goals. Erdoğan’s commitment to more sustainable policies has led to significant improvements in the country’s financial stability, with Moody’s Ratings even raising Turkey’s credit rating by two notches.
Key points to consider:
- The economic turnaround in Turkey has been driven by policymakers such as finance minister Mehmet Şimşek, who prioritized replenishing the country’s foreign currency reserves that were previously depleted.
- Erdoğan’s decision to maintain ultra-low interest rates had caused inflation to soar, leading to a rush for dollars and widening the current account deficit.
- The recent series of interest rate hikes, from 8.5% to 50%, has encouraged locals to shift back to the lira, helping to stabilize the economy.
- Foreign investor confidence in Turkey’s markets has also grown, with approximately $12.5 billion being invested in local government debt since last June.
- Despite the termination of the deposit agreement with Saudi Arabia, economic cooperation between the two countries remains strong, as seen in recent diplomatic visits and agreements signed by senior officials.
Turkey’s economic revival, marked by improved foreign reserves, reduced current account deficit, and increased investor confidence, underscores the country’s resilience and determination to overcome past challenges. The termination of the Saudi deposit is a symbolic step towards self-reliance and sustainable economic growth. As Turkey continues on this path, maintaining strong partnerships and attracting foreign investments will be crucial for long-term prosperity.
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