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The Turkish economy has been hit hard by high inflation, huge price increases are plaguing people, energy, housing or staple foods have to be paid dearly to provide. And yet, by order of President Recep Tayyip Erdogan, the Turkish Central Bank decided to cut interest rates from 16 to 15 percent.
Reducing interest rates during inflation is unusual. Central banks usually fight high inflation by raising interest rates.
As expected, the payment bill came: The Turkish lira fell even more. Erdogan demands patience and promises that his monetary policy will succeed in the long run. Investments and production will be boosted immediately and exports will increase.
This economic and monetary policy resembles the “Chinese model”, said the president according to Turkish media, before the leadership of the ruling party, AKP.
Erdogan sees other similarities between Turkey and China.
Both popular economies managed to have growth even in the year of the coronavirus crisis. Also, both countries are preferred by investors, who benefit from low labor and production costs.
However, many experts and politicians in opposition to Erdogan say that the comparison with China is absurd and insist that Turkey can not be guided by the Chinese model, because it does not have such a large economy and population.
“There is a completely different economic dynamic,” says Tunca.
“China has the largest population in the world and attracts the whole world with its huge production capacity,” says Arda Tunca, from the head of financial services provider Eko Faktory, recalling that unlike Turkey, China has not left neglect the specialization of the skilled workforce.
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