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Erdogan’s Fallen Economy Czar Breaks Silence to Berate Critics

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(Bloomberg) — Turkey’s former finance minister broke months of silence that followed his abrupt resignation by threatening legal action against critics who say his policies cost the nation more than $100 billion dollars in reserves.

“There is no possibility of any foreign currency or lira resources of the central bank disappearing, evaporating or being transferred to a different location,” a lawyer for Berat Albayrak, who is also President Recep Tayyip Erdogan’s son-in-law, said in a statement published Saturday. Albayrak’s attorney said he’d sue detractors for 500,000 liras ($71,000) for defamation and donate the compensation to the families of fallen soldiers.

After Albayrak took over as economy czar in July 2018, Turkey began aggressively spending foreign currency reserves to defend the lira during times of volatility. Goldman Sachs Group Inc. economists estimated the sales exceeded $100 billion last year alone.

The pace at which foreign exchange holdings were eroded left Turkey’s economy more vulnerable to external shocks but also failed to stabilize the lira, which weakened to a record low just before Albayrak’s departure. The Turkish currency slid more than 40% overall during his tenure, making it the worst performer among major world currencies tracked by Bloomberg.

“Disappearance”

In recent months, Turkish opposition parties, led by the Republican People’s Party, or CHP, have ramped up criticism both of Albayrak’s policies and his “disappearance” since his unexpected resignation in November.

“The central bank’s $128 billion is gone but the ‘son-in-law’ responsible is at large,” the CHP tweeted over the weekend.

Albayrak’s departure three months ago was part of a broader overhaul of Turkey’s top economic policy team. Officials familiar with the matter told Bloomberg at the time the changes were driven by Erdogan’s own frustration over how the country’s reserves had been used. The reserve policy was executed by the central bank with strong backing from Albayrak’s ministry, the people said, as it sought in vain to stabilize markets without raising interest rates — in line with Erdogan’s disdain for high borrowing costs.

Albayrak has drawn support from his successor, Lutfi Elvan, who said the foreign exchange transactions were carried out “in line with the goal of financial stability” amid “extraordinary fluctuations in global markets.”

Turkey has delivered substantial interest-rate hikes since the appointment of Naci Agbal as central bank governor and his ally, Elvan. The moves have spurred a more than 20% rally in the lira as expectations grow that Turkey is returning to more orthodox monetary policy.

©2021 Bloomberg L.P.

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India's economy expands 0.4% in Oct.-Dec., ending recession – Alaska Highway News

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NEW DELHI — India’s economy expanded by a weaker-than-expected 0.4% in the October-December quarter, which still allowed it to escape recession following large contractions in the two previous quarters during the coronavirus pandemic, the government said Friday.

The National Statistical Office projected an 8% contraction for the 2020-21 financial year, which ends in March. In January, it had projected a contraction of 7.7% for the fiscal year, following 4% growth in 2019-20.

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It said fertilizer production rose by 2.7% in January, steel by 2.6% and electricity generation by 5.1%. Coal production declined by 1.8%, crude oil by 4.8% and natural gas by 2%, it said in a statement.

India’s economy contracted by 7.5% in the July-September quarter following a record plunge of 23.9% in the previous three months. The government had imposed a strict two-month lockdown across the country in March after the outbreak of the pandemic.

A country enters a technical recession if its economy contracts in two successive quarters. India’s recovery is expected to improve with a rise in consumer demand and investment.

India’s central bank, the Reserve Bank of India, is projecting gross domestic product growth of 10.5% in financial year 2021-22. The International Monetary Fund has projected 11.5% growth in calendar 2021.

The IMF estimated that the Indian economy contracted 8% in 2020.

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EU's Economy Chief Calls for New Fiscal Rules to Aid Recovery – BNN

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(Bloomberg) — The European Union’s fiscal rules should be adapted to allow for more spending to boost growth as countries struggle to pull their economies out of pandemic-induced recessions, according to the bloc’s top economic official.

EU Economic Affairs Commissioner Paolo Gentiloni, speaking at the European Fiscal Board’s annual conference on Friday, reiterated calls to withdraw public support very gradually in order to avoid a sharp rise in insolvencies. But he added that reducing debt loads will remain warranted once the crisis has passed.

The euro-area economy contracted by 6.8% last year and the European Commission forecasts growth of 3.8% for this year, with predictions hinging on virus containment measures starting to be eased toward the end of the second quarter. The bloc is beginning to discuss how they can start shifting from blanket support measures for their business and workers to more targeted ones.

“Given the context of a very deep, uneven recession and high uncertainty, I believe it would be wiser to err on the side of doing more, not less,” Gentiloni said on Friday. “With the previous crisis we saw how costly it was to turn off the taps too soon.”

Changing the Rulebook

The bloc’s fiscal rules were suspended when the coronavirus hit, and few believe they can ever return in the same form. They require countries to aim for budget deficits of less than 3% and debt burdens below 60% of gross domestic product. The commission expects those figures to be more than 6% and 100% for the euro area this year.

The rules were already set to be rewritten before the pandemic started, as they were frequently breached and there was little evidence they were contributing to either stability or growth. Officials say talks will likely resume in the second half of this year.

The new framework should include a special treatment for growth-enhancing expenditure, Gentiloni said, arguing that the composition of debt — and whether it includes spending on key areas such as infrastructure and education — should matter when assessing its sustainability.

“Our fiscal rules should be adapted to improve the composition of public finances and make sure that any new debt is good debt,” he said.

Still, reducing debt loads is likely to remain central to any new framework. While overly strict rules could lead to a “self-defeating adjustment,” Gentiloni said a “credible mechanism to steer debt onto a gradual and steady downward trajectory remains warranted.”

©2021 Bloomberg L.P.

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India's economy expands 0.4% in Oct.-Dec., ending recession – The Tri-City News

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NEW DELHI — India’s economy expanded by a weaker-than-expected 0.4% in the October-December quarter, which still allowed it to escape recession following large contractions in the two previous quarters during the coronavirus pandemic, the government said Friday.

The National Statistical Office projected an 8% contraction for the 2020-21 financial year, which ends in March. In January, it had projected a contraction of 7.7% for the fiscal year, following 4% growth in 2019-20.

It said fertilizer production rose by 2.7% in January, steel by 2.6% and electricity generation by 5.1%. Coal production declined by 1.8%, crude oil by 4.8% and natural gas by 2%, it said in a statement.

India’s economy contracted by 7.5% in the July-September quarter following a record plunge of 23.9% in the previous three months. The government had imposed a strict two-month lockdown across the country in March after the outbreak of the pandemic.

A country enters a technical recession if its economy contracts in two successive quarters. India’s recovery is expected to improve with a rise in consumer demand and investment.

India’s central bank, the Reserve Bank of India, is projecting gross domestic product growth of 10.5% in financial year 2021-22. The International Monetary Fund has projected 11.5% growth in calendar 2021.

The IMF estimated that the Indian economy contracted 8% in 2020.

The Associated Press

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