World

President Erdogan vows to tame Turkish inflation as skepticism grows

President Recep Tayyip Erdogan promised on Wednesday to tame Turkey’s surging inflation, which hit 36 percent last month, but economists predicted it could push much higher, piling further pressure on the battered lira currency.

The lira shed 44 percent of its value in 2021, its worst performance in Erdogan’s near two decades in power.

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It stood at 13.31 against the dollar at 1705 GMT, up from Tuesday’s close of 13.8. Earlier on Wednesday it had rallied as far as 4.7 percent to 13.15, its strongest level in more than a week, though it was not immediately clear why it had firmed so much.

Thanks in part to costly state interventions in the currency market and to government measures that helped calm a full-blown crisis last month, the lira had largely held in a 13.7-13.94 range since last Thursday.

Speaking in parliament, Erdogan said Turkey was protecting its economy against what he called attacks and had taken under control “foreign financial tools that can disrupt the financial system.”

“The swelling inflation is not in line with the realities of our country,” Erdogan said, adding that the government’s measures would soon soften the burden of “unjust” price hikes.

Under pressure from Erdogan, who seeks higher growth by boosting production and exports, the central bank has slashed its policy rate by 500 basis points to 14 percent since September. It holds its next rate-setting meeting on Jan 20.

Goldman Sachs said in a research note it expected annual inflation to exceed 40 percent in January, after which it could surpass 50 percent and remain elevated until the end of the year, when base effects would lower it to around 33 percent.

“The deeply negative real rates and the high level of loan growth are likely to keep inflation elevated and continue to put pressure on the lira,” the Wall Street bank said.

Economic growth

Despite the recent market volatility, Turkey’s economy is estimated to have grown by a hefty 9.5 percent in 2021, the World Bank said in its latest Global Economic Prospects report, as it rebounded from the coronavirus pandemic and related lockdowns.

But the bank also forecast that growth would slow to 2.0 percent this year and 3.0 percent in 2023. In its previous report last June, it had seen growth of 5.0 percent in 2021 and 4.5 percent in both 2022 and 2023.

Turkey’s $720-billion economy grew 0.9 percent in 2019 and 1.8 percent in 2020, weighed down by a recession triggered by a separate currency crisis and later by the pandemic.

After the lira slumped to a record low of 18.4 against the dollar in late December, Erdogan announced a scheme to encourage savers to convert foreign exchange deposits, compensating depositors for any losses due to lira weakness.

On Tuesday Turkey added corporate accounts to the scheme, which the Treasury says has attracted some 108 billion lira ($7.8 billion) of deposits.

Goldman Sachs said it expected Turkish authorities to attempt “more administrative and regulatory measures” to curb inflation before making an eventual monetary policy U-turn.

But Carlos de Sousa, EM debt portfolio manager at Vontobel Asset Management, said he did not see rate hikes any time soon.

“This time is different. Erdogan has finally got tired (of having high interest rates),” he said.

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World

Saudi Arabia on track to achieve UN Sustainable Development Goals by 2030: Minister

Saudi Arabia is on track to achieve the United Nations’ Sustainable Development Goals (SDGs) by 2030, the country’s Deputy Minister for Water told the UN this week.

Dr Abdulaziz al-Shaibani – who headed the Kingdom’s delegation participating in the UN 2023 Water Conference in New York between March 22-24 – said the Kingdom will achieve its goals thanks to the restructuring of the water sector and the development of the National Water Strategy, state news agency SPA reported Friday.

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Saudi Arabia has allocated $80 billion for water projects within the coming years as part of Saudi efforts to achieve universal and equitable access to safe and affordable drinking water for all.

Dr. Al-Shaibani added that the Kingdom launched Vision 2030 and adopted the National Water Strategy in line with the goals of sustainable development.

The National Water Strategy aims to preserve water resources, protect the environment, and provide high-quality and efficient services.

The objectives of the National Water Strategy are in line with SDG6 in enabling access to clean and safe water globally.

“The Kingdom aspires to provide sanitation services to all by increasing the percentage of the population covered by sanitation services to be more than 95 percent by 2030. Also, KSA established the National Water Efficiency and Conservation Center,” Dr. Al-Shaibani added.

He noted that sustainable and resilient water management was on the G20 agenda during Saudi Arabia’s presidency and stressed that the Kingdom is on the right track to improving water demand management in agriculture to achieve SDG6.

The 2030 Agenda for Sustainable Development, adopted by all United Nations Member States in 2015, saw all 193 member countries of the UN unanimously adopt a landmark set of development goals intended to accelerate the world’s efforts to eradicate poverty, end hunger, protect the oceans and address climate change by 2030.

The 17 sustainable development goals are broken down into 169 specific targets that each country has committed to try to achieve voluntarily over the next 15 years.

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World

South Korea’s Yoon vows to make North pay price for its provocations

South Korean President Yoon Suk Yeol said on Friday he will make sure North Korea pays a price for its “reckless provocations”, hours after the North said it has tested a new nuclear-capable underwater attack drone.

North Korean state news agency KCNA said on Friday it tested a new nuclear underwater attack drone under leader Kim Jong Un's guidance this week, as a US amphibious assault ship arrived in South Korea for joint drills.

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The North's state news agency also confirmed it fired cruise missiles during the weapon test and firing drill that took place from Tuesday to Thursday.

During the drill, the North Korean drone cruised underwater for over 59 hours and detonated in waters off its east coast on Thursday, the KCNA said. It did not elaborate on the drone's nuclear capabilities.

The drone system is intended to make sneak attacks in enemy waters and destroy naval striker groups and major operational ports, the KCNA said.

“This nuclear underwater attack drone can be deployed at any coast and port or towed by a surface ship for operation,” the news agency said.

World

Ukraine prepares counteroffensive as Russia’s assault on Bakhmut flags

Ukrainian troops, on the defensive for months, will soon counterattack as Russia’s offensive looks to be faltering, a commander said, but President Volodymyr Zelenskyy warned that without a faster supply of arms the war could last years.

Zelenskyy said Europe must increase and speed up its supply of weapons, again calling for long-range missiles, ammunition and modern aircraft, and impose additional sanctions on Russia.

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“If Europe waits, the evil may have time to regroup and prepare for years of war,” a clearly frustrated Zelenskyy said on Thursday in a video address to European Union leaders, delivered from a train.

At the EU summit, leaders approved a plan agreed by foreign ministers on Monday to send 1 million artillery shells to Ukraine over the next year. They also discussed global food security and sanctions on Russia.

Britain has pledged to supply armor piercing munitions containing depleted uranium to help destroy Russian tanks, a step President Vladimir Putin said would force a response from Russia as the weapons had “a nuclear component”.

Slovakia said on Thursday it had handed over the first four MiG-29 jets it has pledged to Ukraine, with the rest to be delivered in weeks.

Ukraine’s top ground forces commander Oleksandr Syrskyi said his forces would soon begin a counter offensive after withstanding Russia’s brutal winter campaign.

He said Russia’s Wagner mercenaries, who have been at the front line of Moscow’s assault on eastern and southern Ukraine, “are losing considerable strength and are running out of steam”.

“Very soon, we will take advantage of this opportunity, as we did in the past near Kyiv, Kharkiv, Balakliya and Kupiansk,” he said, listing Ukrainian counteroffensives last year that recaptured swathes of land.

There was no immediate response from Moscow to suggestions its forces in Bakhmut were losing momentum, but Wagner boss Yevgeny Prigozhin issued statements in recent days, warning of a Ukrainian counterassault.

On Monday, Prigozhin published a letter to Russian Defence Minister Sergei Shoigu, saying Ukraine aimed to cut off Wagner’s forces from Russia’s regular troops.

Reuters journalists near the front line north of Bakhmut saw signs consistent with the suggestion that the Russian offensive in the area could be waning. At a Ukrainian-held village west of Soledar, on Bakhmut’s northern outskirts, the intensity of the Russian bombardment noticeably lessened from two days earlier.

“It was really hot here a week ago, but in the last three days it has been more quiet,” said a Ukrainian soldier who used the call sign “Kamin”, or “Stone”.

“We can see this in the enemy’s air strikes. If before there were five-six air raids in a day, today we had only one helicopter attack,” said the soldier.

A slowdown by Russia in Bakhmut could mean it is diverting its troops and resources to other areas.

Britain said on Thursday that Russian troops had made gains further north this month, partially regaining control over the approaches to the town of Kreminna. Intense battles were also under way further south.

Ukrainian military analyst Oleh Zhdanov agreed with that assessment. He said on YouTube that Russia’s attacks on Bakhmut were decreasing, and it was shifting its efforts south to the town of Avdiivka.

Russia’s forces have become more active in areas to the north in the Kharkiv and Luhansk regions as well as central Zaporizhzhia and southern Kherson regions, he said.

Any shift in momentum in Bakhmut, if confirmed, would be remarkable given the city’s symbolic importance as the focus of Russia’s offensive, and the scale of the losses on both sides there in Europe’s bloodiest infantry battle since World War Two.

On the ground in Ukraine, front lines have largely been frozen since November. Ukraine had looked likely to pull out of Bakhmut weeks ago but decided to fight on.

Zelenskyy had earlier on Thursday continued a tour of front-line provinces, visiting the Kherson region in the south a day after meeting troops near Bakhmut.

A video showed him meeting residents in Posad Pokrovske, a bombed-out village on the former Kherson front line recaptured in Ukraine’s last big advance last year.

Russia invaded Ukraine in February 2022 in what it calls a “special military operation”, saying Ukraine’s ties to the West were a security threat. Since then, tens of thousands of Ukrainian civilians and soldiers on both sides have been killed.

Russia has destroyed Ukrainian cities and set millions of people to flight. It says it has annexed nearly a fifth of Ukraine. Kyiv and the West call the war an unprovoked assault to subdue an independent country.

European Commission President Ursula von der Leyen, said the EU would work to find Ukrainian children deported to Russia and press for their return. She said 16,200 children had been deported and only 300 returned to Ukraine.

The International Criminal Court issued an arrest warrant for Putin a week ago for the forcible removal of Ukrainian children.

“It is a horrible reminder of the darkest times of our history … to deport children. This is a war crime,” von der Leyen said.