It’s been 4 months since Erdogan announced the ‘new economic model’… Here is his invoice!

AKP President Erdogan, in a TV show he attended on November 30, announced that Turkey had moved to the “new economic model”.

“With the new economic model, we are pushing back on the policy of attracting speculative money by paying high interest rates. We will support production and exports with a low interest rate. he said.

According to Sözcü’s report, the situation of the last four months did not correspond to the objectives of this declaration.

Many economists say that when the exchange rate and inflation got out of control with the interest rate cuts initiated by the Central Bank (CBRT) in September, the government started using the term “new economy model”. and that there was no model.


The dollar/TL rate, which was 8.30 before the CBRT interest rate cuts and 12.96 on November 30, when President Erdoğan announced the “new economic model”, rose to 18, 36 on December 20.

The exchange rate, which stands at 14.70, is 77% above its level before the interest rate cut and 13.4% above that of 30 November.

The dollar exchange rate, which is under pressure due to a high current account deficit, high inflation and negative real interest rates, is tempted to maintain it by using CBRT reserves and indexing the savings in Turkish lira on foreign currency with deposits protected against the currency.

While the amount of currency-protected deposits increased to TL 610.4 billion on March 25, billions of pounds of exchange difference are being paid from the public budget due to the increase in the exchange rate.


Official annual consumer inflation was 19.25% in August 2021, before the CBRT began rate cuts. The CBRT policy rate was 19%.

In November, when Erdoğan announced the new economic model, inflation was at 21.31%, while the key rate was cut to 15%.

Currently, headline inflation is at its highest level in 20 years. It is certain that inflation, which rose to 54.44% in February, will exceed 60% in March.

Turkey, surpassing even Venezuela in terms of monthly inflation in December, January and February, rose to eighth place in the world’s high inflation ranking.

The inflation felt by most citizens is much higher than the rates announced by TURKSTAT.

The Inflation Research Group (ENAG) announced inflation of 123.8% in February.


While the CBRT held the benchmark rate steady at 14%, 10- and 5-year Treasury bond yields rose above 28% last week, hitting a record high.

Interest on 10-year Treasury bonds was 16.98% in early September 2021, before the start of the CBRT interest rate cuts. Over the 7-month period, the 10-year bond yield rose by more than 1,100 basis points.

The increase in the yield on 5-year bonds was more than 1,000 basis points in about 7 months.

The Ministry of Treasury and Finance borrowed $2 billion on March 17, when the interest rate was 8.625%. This rate was the highest borrowing rate after February 2003 with a maturity of 5 years for borrowings denominated in dollars.


Average bank consumer loan interest rates were 23% before the CBRT rate cuts and on November 30. Today, it is over 28%.

Commercial lending rates, which were around 21% before the CBRT interest rate cuts, fell to 18% on November 30, but are still at 21% today.

The CBRT’s low policy rate and its 17% restriction on exchange-protected deposits are effective in keeping lending rates low relative to inflation.

Loans distributed at negative real interest rates also fuel inflation.


At a time when energy prices around the world were rising rapidly, the interest operation to increase exchange rates caused prices to double in TL.

The price per liter of gasoline was around 7.76 TL before the CBRT interest rate cuts, and was 9.67 TL on November 30. Today, a liter of gasoline is sold at 19.80 TL.

The rate of increase has been 105% since Erdogan’s statement on November 30. During this period, diesel increased by 117%.

In the four months from November 30, 2021 to April 1, 2022, the rise in natural gas was 68% for housing and 125% for industry and power plants.

The government’s biggest claim in the new economic model was to have a current account surplus with the benefit of a “competitive exchange rate”, which will be brought about by keeping the value of the TL low. However, the situation turned out to be the opposite due to high raw material prices.

Turkey’s monthly current account deficit, which was $1.8 billion in January 2021, rose to $7.1 billion in January 2022, the highest in four years.

Before the CBRT interest rate cuts, Turkey had a surplus of $920 million in August 2021. There was a current account surplus in September and October, but the current account deficit gradually increased over the following months.


It was claimed that unemployment would decrease in the new economic model. Turkstat’s strict unemployment rate, which was 11.2% on November 30, rose to 11.4% in January.

Turkstat’s broad unemployment rate, which was 22.1% as of November 30, rose to 22.9% in January.

Unemployment is expected to rise in the coming months as the economy slows.

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