Turkey's Erdogan signals economic U-turn in picking orthodox Simsek
Erdogan begins new five-year term after runoff win
Unorthodox rate cuts had exacerbated cost-of-living crisis
Economy under deep strain, Simsek seen reversing course
Recasts with Simsek and other new cabinet appointments, adds analyst
By Huseyin Hayatsever and Ezgi Erkoyun
ANKARA, June 3 (Reuters) -President Tayyip Erdogan signalled on Saturday his newly-elected government would return to more orthodox economic policies when he named Mehmet Simsek to his cabinet to tackle Turkey's cost-of-living crisis and other strains.
Simsek's appointment as treasury and finance minister could set the stage for interest rate hikes in coming months, analysts said - a marked turnaround from Erdogan's longstanding policy of slashing rates despite soaring inflation.
After winning a runoff election last weekend, Erdogan, 69, who has ruled for more than two decades, began his new five-year term by calling on Turks to set aside differences and focus on the future.
Turkey's new cabinet also includes Cevdet Yilmaz, another orthodox economic manager, as vice president, and the former head of the National Intelligence Organisation (MIT) Hakan Fidan as foreign minister, replacing Mevlut Cavusoglu.
Erdogan's inauguration ceremony at Ankara's presidential palace was attended by NATO Secretary-General Jens Stoltenberg, Venezuelan President Nicolas Maduro and other dignitaries and high-level officials.
The apparent U-turn on the economy comes as many analysts say the big emerging market is heading for turmoil given depleted foreign reserves, an expanding state-backed protected deposits scheme, and unchecked inflation expectations.
Simsek, 56, was highly regarded by financial markets when he served as finance minister and deputy prime minister between 2009 and 2018.
Reuters reported earlier this week Erdogan was almost certain to put him in charge of the economy, marking a partial return to more free-market policies after years of increasing state control of forex, credit and debt markets.
QUESTION OF INDEPENDENCE
Analysts said that after past episodes in which Erdogan pivoted to orthodoxy only to quickly return to his rate-cutting ways, much would depend on how much independence Simsek is granted.
"This suggests Erdogan has recognised the eroding trust in his ability to manage Turkey’s economic challenges. But while Simsek’s appointment is likely to delay a crisis, it is unlikely to present long-term fixes to the economy," said Emre Peker, a director at Eurasia Group covering Turkey.
"Simsek will likely have a strong mandate early in his tenure, but face rapidly increasing political headwinds to implement policies as March 2024 local elections draw near."
Erdogan's economic programme since 2021 stresses monetary stimulus and targeted credit to boost economic growth, exports and investments, pressing the central bank into action and badly eroding its independence.
As a result, annual inflation hit a 24-year peak beyond 85% last year before easing.
The lira TRYTOM=D3 has lost more than 90% of his value in the last decade after a series of crashes, the worst in late 2021. It hit new all-time lows beyond 20 to the dollar after the May 28 vote.
'WAYS TO RECONCILE'
Turkey's longest-serving leader, Erdogan won 52.2% support in the runoff, defying polls that predicted economic strains would lead to his defeat.
His new mandate will allow Erdogan to pursue the increasingly authoritarian policies that have polarised the country, a NATO member, but strengthened its position as a regional military power.
At the inauguration ceremony, attended by Hungarian Prime Minister Viktor Orban and Armenian Prime Minister Nikol Pashinyan, Erdogan struck a conciliatory tone.
"We will embrace all 85 million people regardless of their political views ... Let's put aside the resentment of the election period. Let's look for ways to reconcile," he said.
"Together, we must look ahead, focus on the future, and try to say new things. We should try to build the future by learning from the mistakes of the past."
Earlier, reading out the oath of office, Erdogan vowed to protect Turkey's independence and integrity, to abide by the constitution, and to follow the principles of Mustafa Kemal Ataturk, founder of the modern secular republic.
Erdogan became prime minister in 2003 after his AK Party won an election in late 2002 following Turkey's worst economic crisis since the 1970s.
In 2014, he became the country's first popularly elected president and was elected again in 2018 after securing new executive powers for the presidency in a 2017 referendum.
The May 14 presidential election and May 28 runoff were pivotal given that the opposition had been confident of ousting Erdogan and reversing many of his policies, including proposing sharp interest rate hikes to counter inflation, running at 44% in April.
In his post-election victory speech, Erdogan said inflation was Turkey's most urgent issue.
EXCLUSIVE-Turkey's new cabinet almost certain to include Simsek - sources nL1N37S1VK
Writing and additional reporting by Jonathan Spicer; Editing by Frances Kerry, Giles Elgood and Christina Fincher
Powiązane aktywa
Najnowsze wiadomości
Wyłączenie odpowiedzialności: Każdy z podmiotów należących do XM Group świadczy usługę polegającą wyłącznie na realizacji zleceń i dostępie do naszej internetowej platformy transakcyjnej, umożliwiając danej osobie przeglądanie i/lub korzystanie z treści dostępnych na stronie lub za jej pośrednictwem, co nie ma na celu zmiany lub rozszerzenia tego zakresu, ani nie zmienia i nie rozszerza go. Taki dostęp i korzystanie z niego podlegają w każdej chwili: (i) Warunkom umowy, (ii) Ostrzeżeniom o ryzyku i (iii) Pełnemu wyłączeniu odpowiedzialności. Treści te są zatem podawane wyłącznie jako informacje ogólne. W szczególności należy pamiętać, że treści zawarte na naszej internetowej platformie transakcyjnej nie stanowią oferty ani zaproszenia do zawarcia jakichkolwiek transakcji na rynkach finansowych. Transakcje na każdym rynku finansowym wiążą się ze znacznym poziomem ryzyka dla twojego kapitału.
Wszystkie materiały publikowane na naszej internetowej platformie transakcyjnej są przeznaczone wyłącznie do celów edukacyjnych/informacyjnych i nie zawierają – i nie powinny być uważane za zawierające – porad ani rekomendacji dotyczących finansów, inwestycji, podatków lub transakcji, zapisu naszych cen transakcyjnych, ani też oferty lub zaproszenia do transakcji na jakichkolwiek instrumentach lub niezamówionych promocji finansowych.
Wszelkie treści pochodzące od podmiotów trzecich, jak i treści przygotowane przez XM, takie jak opinie, wiadomości, badania, analizy, ceny i inne informacje lub linki do stron podmiotów trzecich zawarte na tej stronie internetowej są udostępniane na zasadzie „tak, jak jest” jako ogólny komentarz rynkowy i nie stanowią porady inwestycyjnej. W zakresie, w jakim jakakolwiek treść jest interpretowana jako badania inwestycyjne, należy zauważyć i zaakceptować, że treść ta nie była przeznaczona i nie została przygotowana zgodnie z wymogami prawnymi mającymi na celu promowanie niezależności badań inwestycyjnych i jako taka byłaby uważana za komunikat marketingowy w świetle odpowiednich przepisów prawnych i regulacji. Upewnij się, że przeczytałeś(-aś) i rozumiesz nasze dokumenty Powiadomienie o zależnych badaniach inwestycyjnych oraz Ostrzeżenie o ryzyku, dotyczące powyższych informacji, do których można uzyskać dostęp tutaj.
