Erdogan resorts to Gulf states to shore up Turkey’s economy
QAMISHLI, Syria (North Press) – Turkey’s economy deteriorated as in June the budget deficit was seven times higher than last year, reaching $8.37 billion. In July, it widened, the Jerusalem Post reported on Tuesday.
On July 16, Turkey raised the tax on gasoline, adding to the recent two percent increase to VAT and five percent hike to corporation tax. In order to tackle the budget deficit, those tax hikes will have the deleterious side-effect of stoking inflation, which stood at 38 percent in June, according to the Jerusalem Post.
Two days after the tax hike, the Turkish lira weakened to a record low of 26.6 against the dollar.
On July 17, Turkish President Recep Tayyip Erdogan landed in Saudi Arabia, hoping to capitalize on his recent diplomatic efforts at repairing ties with the Gulf states. He tries to shore up his country’s economy through new trade deals.
He told a news conference at an Istanbul airport before setting off that his visit is conducted to achieve “investments and a financial dimension. We have high hopes for both.”
Saudi Arabia agreed to boost Turkey’s economy by way of a major contract. The deal covered the export to Saudi Arabia of the unmanned combat aerial vehicle Bayraktar Akinci, plus the necessary technical cooperation, which is the biggest defense and aviation export contract in the history of the Turkey, according to the source.
Turkey and Saudi Arabia also signed several memoranda of understanding (MoU) in sectors including energy, real estate, defense and direct investments.
Turkey and the United Arab Emirates (UAE) also signed deals worth $50.7 billion – “to further cement ties between the UAE and Turkey,” the Jerusalem Post said, citing UAE Finance Minister Mehmet Simsek.
The agreements involve export financing, earthquake bonds, energy, defense and other sectors.