Turkey’s budget deficit has skyrocketed by over 100%, according to official data released on Monday. The data shows a whopping £6.5billion deficit – this is up by 101.6% compared to the same month in the previous year.
Turkey’s President has expressed ambitious plans for his country’s economy. Recep Tayyip Erdogan has said he wants to turn Turkey into a “global economic powerhouse”. In a bid to realise his dream, the government introduced the so-called Twelfth Development Plan last year.
The four-year project aims to improve Turkey’s “international stature, fostering prosperity and combating inflation whilst maintaining strong and sustainable public finances.”
Foreign Direct Investment (FDI) will play a crucial role in helping the government achieve its goals.
Officials want to attract 1.5% of global FDI and 12% of regional FDI to the country by 2028.
However, investors have been deterred from pouring their money into the country by a number of issues.
Apart from extremely high inflation and a lack of confidence in the local currency, Turkey also suffers from rule of law concerns.
The country has become more authoritarian in recent years, with political power tightly concentrated with the President.
Moreover, a large and persistent current account deficit, low international reserves and large foreign currency liabilities mean there is a risk of a balance of payments crisis.
Turkey’s inflation rate fell from 42.1% to 39.1% in February – the ninth month in a row that it has come down.
This was below market estimates of 39.9%, as well as being the lowest figure since June 2023.
The total also marks the first time inflation has fallen below 40% in 20 months.
February’s lower figure was primarily due to easing price pressures for clothing and healthcare.