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Turkey is trying to modulate inflation, not tame it. The goal is to attract foreign manufacturers to come an set up shop in Turkey. It's very favorable to be us

Turkey is trying to modulate inflation, not tame it. The goal is to attract foreign manufacturers to come an set up shop in Turkey. It's very favorable to be using $USD/$EUR to buy labor/material in Turkey right now. Turkey however doesn't exactly have the stability, skills, or logistics necessary right now for big names to relocate. So they are likely suffering for not much gain.

cherryteastain 3y ago
Which is sad because that stability was there for a brief window between ~2005 and 2013.
- alephnerd 3y ago
  Yep. It's a stunning fall for the Anatolian Tiger, but imo the potential is still there, and China+1 will help. They have a fairly competitive automotive, machinery, power systems and renewables, and chemical industry, and can probably expand it further. If they return to the same economic formula Dervis and Babacan pushed, it can get back on track. That said, a lot of the miraculous growth from 2005-13 was because of Central Anatolia catching up. The only region that hasn't caught up yet is Eastern Anatolia, though it's getting there unless the YPG/PKK screw everything up again.
Alpha3031 3y ago
It's possible to manage a dirty float without setting fire to the domestic economy, you know... In fact, investors tend to be hesitant to invest in economies that are on fire even with favourable exchange rates.
- Workaccount2 3y ago
  > In fact, investors tend to be hesitant to invest in economies that are on fire even with favourable exchange rates. Hence why I don't think their plan is going to work.
nostrademons 3y ago
Sure, but this doesn't even modulate inflation. Negative real interest rates = an incentive to take out credit = private sector monetary expansion regardless of what the central bank does. It's a positive feedback loop that doesn't stop until you get real rates positive.
- JumpCrisscross 3y ago
  > this doesn't even modulate inflation Of course it does. To argue that making the real rate less negative doesn’t affect inflation is to imply Turkey could cut its rates to -100% nominal and not suffer any consequences.
unsupp0rted 3y ago
Are Turkey's materials competitive in USD/EUR right now, relative to other developing economies? All the manufacturers have raised their prices significantly in TRY (Turkish Lira) terms- I suspect to the point that their prices are higher than usual even in USD/EUR terms.
- alephnerd 3y ago
  > materials competitive in USD/EUR right now Yes in power systems, automotive, tooling and machinery, and chemicals. Turkish OEMs are connected with the larger CEE automotive industry, and they are a significant manufacturing of power systems components for Europe and ME. The chemical engineering industry is also fairly competitive (plastics, polymers, etc). It's the same story for Mexico and Thailand.

cherryteastain 3y ago

Which is sad because that stability was there for a brief window between ~2005 and 2013.

alephnerd 3y ago
Yep. It's a stunning fall for the Anatolian Tiger, but imo the potential is still there, and China+1 will help. They have a fairly competitive automotive, machinery, power systems and renewables, and chemical industry, and can probably expand it further. If they return to the same economic formula Dervis and Babacan pushed, it can get back on track. That said, a lot of the miraculous growth from 2005-13 was because of Central Anatolia catching up. The only region that hasn't caught up yet is Eastern Anatolia, though it's getting there unless the YPG/PKK screw everything up again.

Alpha3031 3y ago

It's possible to manage a dirty float without setting fire to the domestic economy, you know... In fact, investors tend to be hesitant to invest in economies that are on fire even with favourable exchange rates.

Workaccount2 3y ago
> In fact, investors tend to be hesitant to invest in economies that are on fire even with favourable exchange rates. Hence why I don't think their plan is going to work.

nostrademons 3y ago

Sure, but this doesn't even modulate inflation. Negative real interest rates = an incentive to take out credit = private sector monetary expansion regardless of what the central bank does. It's a positive feedback loop that doesn't stop until you get real rates positive.

JumpCrisscross 3y ago
> this doesn't even modulate inflation Of course it does. To argue that making the real rate less negative doesn’t affect inflation is to imply Turkey could cut its rates to -100% nominal and not suffer any consequences.

unsupp0rted 3y ago

Are Turkey's materials competitive in USD/EUR right now, relative to other developing economies? All the manufacturers have raised their prices significantly in TRY (Turkish Lira) terms- I suspect to the point that their prices are higher than usual even in USD/EUR terms.

alephnerd 3y ago
> materials competitive in USD/EUR right now Yes in power systems, automotive, tooling and machinery, and chemicals. Turkish OEMs are connected with the larger CEE automotive industry, and they are a significant manufacturing of power systems components for Europe and ME. The chemical engineering industry is also fairly competitive (plastics, polymers, etc). It's the same story for Mexico and Thailand.