Turkish President Recep Tayyip Erdogan on Friday announced an ambitious 100-day action plan, in an attempt to fight currency decline, spur growth and slow down rocketing inflation.
"We are faced with an economic war but don't worry, we will prevail and win this war," said Erdogan in his address to 2,000 people in the presidential palace in the capital Ankara, Xinhua reported.
He detailed his government's 100-day action plan and 400 projects in sectors of economy, energy, transport, tourism, education and foreign policy following his re-election for another five-year presidential term in the general elections on June 24.
Erdogan called on his people to convert their savings into the Turkish lira, in order to bring fresh cash to the financial system and help the vulnerable economy.
"Bring out the dollars, the euros and the gold,’’ he said. “Turn them into liras. Show your local and national resistance against the entire world."
Turkey's economy is struggling to absorb a slide of more than 30% in lira against US dollar this year and surging interest rates, while investors are looking to the Turkish authorities to reduce the 15.85% inflation in July, the highest rate since 2004, through spending cuts and increase in interest rates.
The central bank unexpectedly left rates unchanged at 17.75% at a meeting last month, spurring further declines in the currency.
Lira Crashes Further
The lira took another hit after the United States imposed unprecedented sanctions on Wednesday on two Turkish ministers in an escalating political row, in which the United States demanded the release of US pastor Andrew Brunson, who was detained by Ankara on espionage and terror-related charges.
The lira crashed to an all-time low of 5.1 against the dollar on Friday, even as observers underlined the widening current account deficit of the country and the need for foreign investment to recover.
Ankara's rapidly souring relations with Washington is the latest of tremors affecting Turkish markets. Investors are worried about the government's insistence on pushing for lower interest rates and the appointment of Berat Albayrak, Erdogan's son-in-law, as the minister of finance and treasury.
Albayrak tried to ease investors on Friday, saying the government's "number one goal" was to bring down inflation and interest rates.
"We will see single-digit inflation in 2019," he told private broadcaster NTV.
100-Day Action Plan
The 100-day action plan included measures of supporting small and medium-sized enterprises ahead of the local elections due in March 2019.
According to the ambitious plan, foreign institutional investors will be encouraged to invest in Turkey. The use of lira in contracts will be encouraged to limit the effects of potential volatility of exchange rates on macro-financial stability.
With the policies to be implemented, inflation will be reduced again to single digit, according to Erdogan.
In addition, the president said during his presentation that 48 out of the 400 projects are related to Turkey's defense industry.
"There will be no backing down from these projects which are essential for Turkey's national interests," he vowed.
The Turkish president also stressed the importance of the Chinese, Mexican, Russian and Indian markets in the new era ahead.
They "will become a priority for Turkish exports," Erdogan said.
Another highlight of the action plan is that Turkey plans to issue Chinese yuan-denominated bonds for the first time because of "one-sided" reports of credit rating institutions.
Other major projects include the Canal Istanbul, an artificial sea-level waterway that will connect the Black Sea to the Sea of Marmara and the Mediterranean.
Inflation Surges to Near 16%
Inflation rose again in July to nearly 16%, official statistics showed on Friday, increasing pressure on the central bank to hike interest rates, AFP reported.
Consumer prices reached 15.85% in July from the same month in the previous year, slightly up from 15.39% in June, according to the Turkish statistics office.
However, despite marking a new high since late 2003, the figure was lower than the Bloomberg consensus of 16.4%.
The highest annual rise in the month was in transport, up 24.21%, while prices of food and non-alcoholic drinks were up 19.40% annually.
Istanbul-based QNB Finansbank chief economist Gokce Celik forecast year-end inflation would reach 16.2%, raising a previous prediction of 15.5%.
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