✔ The annualized trade deficit, which was around $43-44 billion a year ago, now stands at $98 billion. More than 100 percent increase in one year.
✔ When the demand for foreign currency is suppressed, they go and try to go; But the problem is getting deeper. If we are in a position to ask Russia to delay gas payments until 2024, we are drifting somewhere.
The plan was wonderful… It was a plan that other countries did not even think of! It might be a little inconvenient, it might cause side effects, but it would be that much; After all, the return was more than the lump sum… Besides, even the most useful medicine did not have side effects!
Interest will be downloaded; as a result, the Turkish currency will lose some value; Again, as a result of this, while exports would increase, imports would slow down, and progress would be made to reduce the current account deficit, which had become a chronic problem, and even to increase it. Is that all? As the interest rate was reduced, production would increase, employment would increase, and growth would accelerate.
So a stone would be thrown and so many birds would be shot…
That stone was laid in September last year and the interest rate cut began.
Exports increased, but imports increased faster…
As such, the current account deficit grew rapidly, let alone shrinking.
An increase in production was achieved for a while, but the problem could not be completely overcome there, the costs increased.
The decline in employment could only be prevented, there was no significant increase in employment.
When the first target fails…
The first target was foreign trade. With the increase in the exchange rate, exporters will be provided with a competitive advantage; As imports became more expensive, it would slow down, perhaps regress, and thus the foreign trade deficit would be greatly reduced.
But the calculations made at the desk did not work. Yes, we listened to the record statements about the increase in exports, and even the increase in exports every month; but there was such an increase in imports that the trade deficit of a year ago doubled.
September, October and November of last year… The annualized trade deficit was $43-44 billion. The Ministry of Commerce released the latest data for September of this year yesterday. The annualized trade deficit now stands at $98 billion.
What’s left for 100? It is certain that the annual deficit will exceed the $100 billion mark by the end of October.
The annual deficit in October last year will be 43.5 billion dollars, this year’s will probably be 105-106 billion dollars.
Whereas 105 billion dollar The deficit was assumed to be reached by the end of this year. According to the medium-term program, the deficit at the end of the year would be $105 billion. The year seems to be closed with a deficit of around $115 billion.
As the need for foreign currency increases…
I always emphasize; economy Although it has very undesirable aspects for the Turkish economy and will cause much bigger problems, especially with the hurricane it will create at the end, the exchange-protected deposit application restrains the domestic foreign exchange demand for the current period.
You know, it’s called dressing treatment, just like that. Thanks to this practice, which aims to save the year and manage until the elections, instead of long-term measures for the benefit of the country, the demand for exchange rates has been broken. Citizen foreign currency prefers the KKM account instead, and legal entities are provided with a number of advantages to open a KKM account. In a sense, banks are constantly penalized to the extent that they cannot convert their foreign currency deposit accounts to KKM.
This practice has cut the domestic foreign exchange demand to a large extent, but imports are required in order for the wheels to turn and industrial production not to be interrupted, which keeps the foreign exchange demand alive. It is obvious that it is now difficult to meet even this demand. In addition, industrial production energy imports have almost bent our backs. Bloomberg’s latest news is an important indicator of the troubles on this issue. It is stated that Turkey has requested a part of the natural gas payments from Russia to be postponed until 2024. This is a very important issue and needs to be addressed in depth when details emerge.
It is undeniable that there is a problem with the currency. But in the words of master Kerim Rota, Con Ahmet’s Recirculation Machine works on the currency exchange and by transferring it from one pocket to another; this wheel is being turned for now with some compulsions.