ANKARA - Pointing out that it is not possible to achieve positive developments in the economy without rebuilding democracy, economist Mustafa Durmuş warned: "If Erdogan wins, inflation will increase even more."

 

After the Presidential and General Elections on May 14, the Credit Risk Premium (CDS) increased in foreign currency and the uncertainty created decreases in the stock market. The Central Bank continues to intervene in the market by reducing the foreign exchange purchase limit and flexible account limit of the banks in order to reduce the foreign exchange demand; however, one day later, the decision to limit the cash advance limit from the credit card was abandoned. While going to the second round of the elections, 28 May, on 14 May, fluctuations in the stock market and exchange rates continue. Economy-Politician Professor Doctor Mustafa Durmuş evaluated the developments in the economy after the elections were held in the second round.

 

'MARKETS ARE WAITING FOR MAY 28'

 

Stating that there was an expectation in the markets before the elections and the CDS decreased accordingly, Durmuş said: “Turkey's foreign exchange system affects borrowing rates and borrowing interest. The fact that it fell was a pleasing situation both for the markets and for the economy. As the exchange rate is suppressed, harsher effects on it may occur in reverse. The fact that CDS went up to 700s after the May 14 elections was also an indication of the upheaval in the market. It can be evaluated as a result of the realization of expectations. Dollar and Euro are trending upwards. Under normal circumstances, those macro-prudential measures would go much higher were it not for some measures taken by the government by squeezing the banks. The markets are nervously awaiting the results of the elections this May 28."

 

THE RESULTS OF ECONOMIC POLICIES

 

Stating that if Erdoğan wins in the second round elections, the Presidential Government System will continue and the economic policies of the government are clear, Durmuş said: “We have seen the results of the economic policies that have been carried out for a while, especially the interest policy implementations. There is very high inflation, high exchange rate and instability in the market. In order to keep the exchange rate, they invented something called currency protected deposit. This has actually turned into a form of transferring wealth to the wealthy and making the rich more prosperous.”

 

'IF ERDOĞAN WINS, INFLATION WILL INCREASE FURTHER'

 

Underlining that if Erdoğan wins the election, inflation will increase further, Durmuş said: “Because Erdoğan will think that these policies are valid for his point of view, that they are accepted by the public, and he will continue these policies. If Erdogan wins in the second round, the economic policies implemented since 2017 will continue. The negative effects in the economy will continue to increase and deepen, and it will be inevitable for the exchange rate to go up. Meanwhile, short-term external debts amount to $203 billion. The fact that the foreign exchange reserves are actually above minus 60 billion dollars, seems to expose Turkey to a very serious balance of payments crisis or to a foreign currency crisis.