Turkey's Erdogan hints at shift in economic policy as new term begins

President addresses the nation after swearing-in ceremony, calling for reconciliation and a focus on the future

Turkish President Recep Tayyip Erdogan and his wife his wife Emine greet guests during his oath ceremony in Ankara. AFP

Turkish President Recep Tayyip Erdogan began a new five-year term on Saturday, urging citizens to set aside their differences and focus on the future after national elections.

In a swearing-in ceremony held at the Parliament in Ankara, Mr Erdogan also hinted at a potential shift in the country's economic policy, indicating the end of a period of low interest rates.

Later in the day, the President announced a new cabinet, the composition of which was keenly anticipated as a sign of the direction of economic policy.

Speaking during an inauguration ceremony at the presidential palace, Mr Erdogan called for reconciliation.

“We will embrace all 85 million people regardless of their political views,” he said.

“Let's put aside the resentment of the election period. ”

He said there was a need to learn from past mistakes and focus on building a better future for the country.

The ceremony was attended by global leaders such as Nato Secretary General Jens Stoltenberg, Venezuelan President Nicolas Maduro, Hungarian Prime Minister Viktor Orban, and Armenian Prime Minister Nikol Pashinyan.

New cabinet

Mr Erdogan changed almost all his cabinet members except for his health and culture ministers.

He named former deputy prime minister Mehmet Simsek, a reassuring figure with international stature, as treasury and finance minister.

Addressing the country's economic troubles will be Erdogan's first priority, with inflation running at 43.70 per cent, partly due to his unorthodox policy of cutting interest rates to stimulate growth.

A former Merrill Lynch economist, Mr Simsek is known to oppose Erdogan's unconventional policies.

During his tenure as finance minister, and deputy prime minister from 2009 to 2018, Mr Simsek was well-regarded by investors.

His potential role in the new cabinet could signify a deviation from the previous strategy of maintaining low interest rates amid high inflation and exercising significant state control over markets.

He served as finance minister between 2009 and 2015 and deputy prime minister in charge of the economy until 2018, before stepping down ahead of a series of lira crashes that year.

Mr Erdogan appointed the head of the National Intelligence Organisation, Hakan Fidan, as foreign minister.

Mr Fidan has been at the helm of the MIT since 2010, and Mr Erdogan once called the 55-year-old his “secret-keeper”.

Erdogan's triumph in election run-off

Mr Erdogan secured 52.2 per cent of the vote in a May 28 run-off, despite the prevailing cost of living crisis that many believed would dent his prospects.

The outcome extends the leadership of Mr Erdogan, who has been accused of increasingly authoritarian policies. He is expected to consolidate Turkey's position as a regional military power.

In his third term as president, Mr Erdogan, 69, will face several pressing issues, such as managing a slowing economy and navigating complicated relationships with western nations.

Having previously served as prime minister after his party's victory in the 2002 elections following a severe economic crisis, Mr Erdogan became the country's first popularly elected president in 2014.

His subsequent election in 2018 granted him new executive powers following a 2017 referendum.

Addressing these challenges, Mr Erdogan acknowledged in his post-election victory speech that inflation, which reached an unprecedented 85 per cent peak last year, was Turkey's most pressing issue.

With depleted foreign reserves, an expanding state-backed protected deposits scheme, and unchecked inflation expectations, analysts warn of economic turmoil if the current policies persist.

He called for unity in the face of these challenges.

“Turkey needs unity and solidarity more than ever,” he said.

His appeal extended to all segments of society, including opposition factions, journalists, writers, civil society members, artists, and politicians, suggesting the necessity of reconciliation to meet national objectives.

Turkey's new parliament members were sworn in on Friday after the May 14 election, with Mr Erdogan's alliance securing a majority in the 600-seat house.