STORY: Expert says Türkiye's return to conventional economy to take time
DATELINE: July 7, 2023
LENGTH: 00:03:08
LOCATION: Ankara
CATEGORY: ECONOMY

SHOTLIST:
1. various of street views in Türkiye (courtesy of ihlas news agency)
2. various of Turkish central bank
3. various of Turkish lira
4. SOUNDBITE 1 (Turkish): BAKI DEMIREL, Professor of Economics at Yalova University
5. SOUNDBITE 2 (Turkish): BAKI DEMIREL, Professor of Economics at Yalova University
6. SOUNDBITE 3 (Turkish): BAKI DEMIREL, Professor of Economics at Yalova University

STORYLINE:

Since winning reelection in May, Türkiye's President Recep Tayyip Erdogan has replaced the country's central bank governor and the minister of treasury and finance with market-friendly figures to address the cost of living crisis.

On June 22, the central bank raised the interest rates from 8.5 percent to 15 percent, the first hike in more than two years that was welcomed by the market as a return to economic orthodox even though investors expected more.

However, returning to a conventional monetary policy after over two years of unorthodox moves of cutting rates to fight high inflation will take time and more monetary moves, an expert said.

SOUNDBITE 1 (Turkish): BAKI DEMIREL, Professor of Economics at Yalova University
"I say that there is no quick fix to Türkiye's economic problems.
It has been three or four years that we are experiencing these problems, however there's been no improvement.
International institutions and banking are calling on Türkiye to hike interest rates to 40 percent."

SOUNDBITE 2 (Turkish): BAKI DEMIREL, Professor of Economics at Yalova University
"As a result, small and medium-sized companies can experience serious woes, it can even be destructive for them causing massive unemployment.
Households could also despair from this situation as they will have to borrow at very high rates."

SOUNDBITE 3 (Turkish): BAKI DEMIREL, Professor of Economics at Yalova University
"Markets should be regulated for excessive price hikes to protect consumers. As soon as the government announces a wage increase, prices go up, this should be regulated. As a result of this situation, we see that households are getting poorer each year.
In this scenario, macroeconomic instability will perdure, and it will not be possible to produce results.
We cannot say that Türkiye has returned to rational policies.
The current policy aims to attract foreign investments, but this aim will not help a fair distribution of wealth in the society."

Tough inflation is on a downward path, according to the latest data announced on Wednesday, it remains high, at 35 percent year-on-year.

Since the start of the year, the lira has also lost 30 percent of its value against the U.S. dollar, and in import-reliant Türkiye this has meant fresh price hikes, bringing new hardships for households.

Xinhua News Agency correspondents reporting from Ankara.
(XHTV)