Following the presidential elections and the 27th term parliamentary elections on Sunday, in which President Recep Tayyip Erdoğan and his Justice and Development Party (AK Party) declared victory, the markets are now focused on many issues, from inflation and the current account deficit to fiscal discipline and the exchange rate.
According to the AK Party's election declaration, which serves as a "road map" in terms of economic policies, in the presidential government system, a strong economic structure will be established in which the business and investment environment is improved, intellectual property rights are strengthened, and physical and social infrastructure investments, which will pave the way for the private sector, are maintained.
On Sunday night, Erdoğan became Turkey's first leader under a presidential system of government, and the People's Alliance between his ruling AK Party and the Nationalist Movement Party (MHP) also secured a parliamentary majority, according to unofficial results.
President Erdoğan received 52.6 percent of the votes in the election.
The AK Party also secured victory with 42.5 percent of the votes in the parliamentary elections, with 99.64 percent of the ballots counted.
The People's Alliance won 53.7 percent of the vote, with 99.1 percent of ballot boxes opened.
In the new period, macroeconomic and financial stability will be maintained decisively, while financial discipline, the most important anchor of the economy, will not be compromised. Efficiency in public expenditure and revenues will be improved for fiscal discipline, existing spending programs will be reviewed, and inefficient expenditures will be liquidated.
The Public Financial Management and Control Law and public procurement legislation will be updated, and the local government revenues will be increased. Meanwhile, the Income Tax Law, the Corporate Tax Law and the Tax Procedural Law will be subject to comprehensive reform.
With stable policies to be implemented, inflation will be reduced to single digits once again. The current account deficit will be eliminated as a structural problem and reduced permanently.
Regulations will be made to prevent tax loss and tax evasion in e-commerce, and informal employment will be reduced from 33.6 percent to 28 percent.
There will be a series of support for exports. The share of high-tech products in exports will be raised from 4 percent to 15 percent.
EXCHANGE RATE POLICY
The main priority in achieving macroeconomic stability will be to assure and maintain price stability. The monetary policy will continue in coordination with the fiscal policy. The Central Bank of Republic of Turkey (CBRT) will continue to directly set the monetary policy instruments to ensure price stability.
The inflation-targeting regime and floating exchange rate regime will continue. Foreign exchange markets will be monitored closely, and the balancing foreign exchange liquidity instruments will be used when necessary.
The use of the Turkish lira will be encouraged in contracts in order to support price stability and limit macro-financial stability effects of possible exchange rate volatility, and necessary mechanisms and incentives will be created to enable firms to manage exchange rate risk more effectively.
The Istanbul International Financial Center project will be given impetus, and an effective and strong financial market structure will be established.
EMPLOYMENT AND INCENTIVES
Unemployment insurance will be reorganized to provide more social protection. By 2023, the employment rate will increase to 53 percent and workforce participation rate to 41 percent. In the next five years, at least one million jobs will be created annually, with more than five million additional jobs in total.
National brands will be created within the scope of Project-Based Incentive System. The share of domestic savings in national income will be raised to 30 percent in 2023.
TRANSPORT AND LOGISTICS
Istanbul New Airport, one of Turkey's most prestigious works, will be opened on Oct. 29.
The Istanbul-Izmir Highway and a significant part of North Marmara Highway will be opened for service next year. The Tekirdağ-Balikesir Highway, which also includes the Çanakkale 1915 Bridge, will be completed by 2022. The Ovit Tunnel will be completed this year, followed by the Zigana Tunnel next year.
The mega project Kanal Istanbul will be launched. The project to link the Black Sea and Marmara with a 45-kilometer channel is planned to be put out to tender.
In the meantime, the railway network will be increased to 25,000 kilometers. High-speed railway projects will be carried out step by step, and the 1,213-kilometer-long high-speed train network will be expanded to 3,000 kilometers. By 2023, the projects will continue for a 662-kilometer-long rail system within the city.
With the first domestic communication satellite project Türksat 6A, Turkey will be among 10 countries that can produce communication satellites.
The Turkish Space Agency will be established to carry out activities in the aerospace industry in the country and to monitor and use the new technologies.
North Aegean Çandarlı and Filyos ports will be put into service and the construction of the Mersin container port will begin.
NEW PROJECTS IN DEFENSE
Defense exports will be accelerated in the new period. Steps will be taken in order to sell the systems that have proven themselves on the field in the aerospace and defense industry to friendly and allied countries to create a scale economy.
The Altay National Tank, which has completed the research and development, and prototype stages, will be moved to the mass production phase. Strategic-class offensive unmanned aerial vehicles will be produced. These vehicles capable of long-haul flights at higher altitudes, with a capacity to carry 1.5 tons, will be equipped with national intelligent bombs. They will be put into service in 2020.
Research and development work will begin in the field of fighter unmanned aerial vehicles. National unmanned fighter jets will be developed by 2023.
NATIONAL TECHNOLOGY CAMPAIGN
In the new period, a "national technological campaign" will be launched within the scope of strategic sectors and innovative production by encouraging the transformation of spending in research and development and innovation into added value. In order to speed up the digital transformation of small and medium sized enterprises, the first of the digital transformation centers will be established at the Informatics Valley. "Design and digital transformation centers" and "model factories," which will serve as a guiding interface in the introduction and effective use of new technologies in large organized industrial zones, will be established. At least 15 new industrial zones will be established in addition to the six industrial zones set up in order to attract domestic and foreign investments in high-tech areas.
A production structure that can produce high added value products in medicine and medical devices, offer products and services to global markets and cover a larger part of domestic medicine and medical device needs will be adopted.
"Turkey's Automobile Project," which will enable Turkey to have new-generation automobile technologies will be realized rapidly.
An "Automotive Testing Center" will be established in Bursa to meet the testing, documentation and research and development needs of civil and military land vehicles.
TURKEY AMONG TOP 5 IN TOURISM REVENUES
Six thematic tourism routes will be established in tourism; winter, belief, Silk Road, olive, Western Black Sea coast and highland. Turkey is targeted to be among the top five countries in the new period in terms of the number of tourists and tourism revenue.
The country is projected to welcome 50 million tourists annually within the scope of 2023 tourism targets. The number of tourists coming for health tourism is planned to be increased from 250,000 to two million people by 2023.
The projects of the Food Committee will be of importance in the new period. Agricultural subsidies will be announced for a minimum of three years and 50 percent grant support will continue to be provided to agriculture-based economic investments to ensure agriculture-industry integration.
"Co-production model" will be realized in 81 provinces and 250 villages. By 2020, the support under IPARD-II (Instrument for Pre-Accession Assistance in Rural Development) will be maintained, and with the grant of TL 5.2 billion ($1.11 billion), 10,000 new investments will be supported. 50,000 new jobs will be created and TL 8.4 billion will be invested in rural areas.
Specialized Organized Industrial Zones Based on Agriculture will be realized, while the 17 ongoing Research and Training Centers and research and development projects will be accelerated.
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