Restricting gold imports aims at sparking economic recovery in Türkiye

The effectiveness of new measures remains unclear
Restricting gold imports aims at sparking economic recovery in Türkiye
Turkey imposes extra charge for some gold imports (Photo Credit: Reuters)

Türkiye has implemented new economic measures, including restrictions on gold imports, in an attempt to address its inflation and current account deficit issues.

The government has introduced a 20 percent additional fee on certain gold imports, covering jewelry, metal products plated with precious metals, and goods from non-European Union (EU) countries and countries without a free trade agreement with Türkiye.

The aim is to curb the current account deficit and promote local production and employment. Additionally, a quota will be imposed on the import of unprocessed gold by precious metal brokers on the Istanbul stock exchange.

The effectiveness of these measures remains unclear, and there are concerns about potential consequences such as an increase in gold smuggling. Additionally, representatives from the jewelry sector express concerns. They worry that the cost of accessing gold will increase. This, according to them, would have a negative impact on their competitiveness in global markets. There are also concerns about the government’s continued control of financial markets through restrictive measures, limiting foreign investor appeal.

Read  more: Does Turkish gold help maintain country’s currency stability?

Under the new economic leadership, inflation has surged to nearly 48 percent in July. The Central Bank has responded by raising its policy rate to 17.5 percent.

However, few expect a drastic rate hike in the near future. The government has intervened in the foreign exchange market to support the lira.

Election influence

Furthermore, some analysts believe that the government’s economic decisions are influenced by upcoming local elections. They argue that election strategies take precedence over restoring market functionality. It is expected that more substantial measures to curb inflation will be implemented after the elections. Critics argue that the current economic management has not effectively addressed inflation.

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