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Timothy Ash Warns of Inflation Risks: Evaluating Turkiye’s Economic Outlook

Renowned economist Timothy Ash discusses Turkiye’s inflation trajectory and the impact on foreign investments following recent economic evaluations by Finance Minister Mehmet Simsek and Central Bank Governor Fatih Karahan.

Renowned British economist Timothy Ash recently shared his insights on the Turkish economy, focusing on inflation projections and their implications for the country’s economic stability. Speaking to CNBC-e, Ash highlighted that achieving an inflation rate between 35-40% by year-end would be reasonable but cautioned about the challenges of reducing it further, suggesting a potential economic “stickiness” post-high inflation periods.

Ash expressed optimism about recent financial policies presented by Minister Simsek, Governor Karahan, and Deputy Governor Cevdet Akcay, emphasizing their consistency in advocating for orthodox economic measures, particularly focusing on combating inflation as the top priority due to its detrimental effects on societal well-being and living standards.

Regarding foreign investment flows and the impact of sustained tight monetary policies, Ash pointed out two critical aspects: substantial portfolio investments totaling around six billion dollars and the need to attract more direct foreign investments (FDI) into Turkiye. Despite recent improvements in relations with the US and EU, Ash highlighted ongoing challenges such as macroeconomic instability, policy uncertainties, geopolitical risks, and perceived legal shortcomings hindering significant FDI inflows, unlike the peak years of 2007-2008.

Ash concluded by underscoring the importance of strengthening ties with Western nations, suggesting that improved diplomatic relations could facilitate greater FDI inflows, essential for revitalizing Turkiye’s trade and financial sectors heavily reliant on Western markets.

Source: Dunya.com / Prepared by Irem Yildiz

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