Economic and political events, which have not been seen so often recently, have been trying to fit in in the last week. In addition to the political developments that would create unrest in the economy, Naci Ağbal, former Minister of Finance and President of the Presidency of Strategy and Budget, who was appointed to this position after the removal of Murat Uysal, the two former Governors of the Central Bank, was the decision to remove Naci Ağbal from his post two days ago.
When we add to this process, it is also the president of the Turkish Statistical Institute replaced several times in recent months, the volatility in the economy due, and it is also easier to understand why the increase in social costs.
The Inflation Research Group follows these developments closely and tries to model the damage that can occur in the economy.
First, let’s explain the damage caused and its effects on the economy in the short and long term.
1. In modern societies, the directors of a few private / autonomous institutions, especially the Central Bank, do not change or change in the short term. Especially, these changes in the institutions whose autonomy is registered and accepted in the sphere of the social reflection of their decisions, always either upset the macroeconomic and microeconomic balances or cause the disorganization of the values that are corrupted.
2. In this environment where our short-term foreign debt (less than a year) is fixed at around $ 200 billion, such layoffs will suddenly raise the country risk premium and reduce our level of international confidence.
3. The autonomy of the Central Bank is the most important characteristic that affects money markets in the short and long term, although it is not taken seriously. This erosion of the idea of autonomy will increase the cost of external debt.
4. The expectation that the new decision-maker will experience the same process will continue to grow. This will negatively affect almost everything from unemployment to inflation, from the wage level to foreign trade.
Continuation of the analysis here.