Fatih Karahan: A Visionary Leader for Economic Stability
His appointment marks a significant milestone in Türkiye’s economic management, signaling a new era of informed, research-driven decision-making at the country’s monetary policy helm.
Turkish President Tayyip Erdogan appointed Fatih Karahan, the deputy governor, as the new central bank governor, following Hafize Gaye Erkan’s resignation due to a “reputation assassination”. Karahan, 42, holds a PhD in economics from the University of Pennsylvania and has nearly a decade of experience as an economist at the Federal Reserve Bank of New York.
In an era demanding exceptional economic stewardship, Fatih Karahan, Ph.D., steps into the role of Governor of the Central Bank of the Republic of Türkiye (CBRT), bringing with him a wealth of experience and a clear vision for the country’s monetary policy.
Karahan has held positions as an adjunct professor at both Columbia University and New York University, in addition to serving as a principal economist for Amazon in 2022. In July of the previous year, Turkish President Tayyip Erdogan appointed Karahan as one of the three new deputy governors of the central bank.
Since July 28, 2023, Fatih had held the position of Deputy Governor at the Central Bank of the Republic of Türkiye.
Turkey’s economy has some strengths, such as its large size, high growth, and moderate tax burden, but it also has some weaknesses, such as its high inflation, high unemployment, and low economic freedom.
Born in 1982 in Eskişehir, Karahan’s journey from a dual major at Boğaziçi University to the helm of Türkiye’s central banking system charts a path through academic excellence, influential research, and strategic economic leadership.
Educational Foundation and Early Career
Fatih Karahan’s academic pursuits laid a robust foundation for his illustrious career. Graduating from Boğaziçi University in 2006 with degrees in Mathematics and Industrial Engineering, he later earned a Ph.D. in Economics from the University of Pennsylvania in 2012.
Karahan’s early career saw him join the Federal Reserve Bank of New York as an economist, where he focused on labor and product market studies and served as a monetary policy advisor until 2022. His roles as an adjunct professor at Columbia University and New York University further underscored his commitment to economic education and research.
From Amazon to the Central Bank
In a move from academia and public service to the corporate sector, Karahan joined Amazon in 2022, quickly rising to the position of principal economist by November of the same year. However, his transition back to public service was marked by his appointment as Deputy Governor of the CBRT in July 2023, a role that set the stage for his current leadership position.
A New Chapter for the CBRT
On February 3, 2024, a Presidential Decree published in the Official Gazette No.32449 officially appointed Dr. Fatih Karahan as Governor of the CBRT. This appointment underscores a strategic vision for Türkiye’s economic future, emphasizing the importance of achieving price stability and the implementation of monetary policies to support sustainable growth.
In his first statement as Governor, Karahan highlighted his commitment to disinflation and monetary tightness, aiming to align inflation with targeted levels and ensure economic stability. His approach is characterized by vigilance and readiness to adjust policies in response to inflationary trends, signaling a proactive and dynamic strategy in navigating Türkiye’s economic landscape.
Looking Ahead
Governor Karahan is set to present the first Inflation Report of 2024 on February 8, offering insights into the CBRT’s policy direction and economic forecasts. This briefing will be closely watched by economists, investors, and policymakers worldwide, as it will provide valuable indications of Türkiye’s economic trajectory under Karahan’s leadership.
Turkey has the potential to become a high-income country and a regional leader, but it also needs to address its economic and institutional challenges and to pursue a more inclusive and sustainable growth model.
***
Who appoints the governor of the Central Bank?
The governor of the Central Bank of the Republic of Turkey is appointed for a term of four years by a decree of the President of the Republic. The current governor is Fatih Karahan, who was appointed on February 3, 2024, by President Recep Tayyip Erdogan. He replaced Hafize Gaye Erkan, who resigned after less than a year in office.
***
Top 5 Facts: Fatih Karahan
- Fatih Karahan is the new governor of the Central Bank of the Republic of Turkey, appointed on February 3, 2024, after the resignation of Hafize Gaye Erkan.
- Karahan is a 42-year-old economist with a PhD in economics from the University of Pennsylvania.
- He previously worked as an economist at the Federal Reserve Bank of New York and Amazon. He has vowed to maintain a tight monetary policy to curb inflation, which analysts expect to be more hawkish than his predecessor.
- Karahan is also the nephew of the Turkish Ambassador to the United States, Hasan Murat Mercan.
- His appointment has attracted attention from the international media and financial markets, as Turkey faces economic challenges amid a currency crisis and high inflation.
***
Key Facts: The Republic of Türkiye
The Republic of Türkiye, also known as Turkey, is a country mainly located on the Anatolian Peninsula in West Asia, with a smaller part on the Balkan Peninsula in Southeast Europe.
Turkey is known for its rich blend of history, culture, and natural beauty. It offers a variety of experiences, from exploring the ancient ruins of Ephesus, marveling at the stunning Hagia Sophia, to relaxing on the golden sands of the Turkish Riviera. The country’s cuisine is diverse, with dishes ranging from spicy kebabs to sweet baklava.
Notable cities include Antalya, known for attractions like the Antalya Museum, Hadrian’s Gate, and Düden Waterfalls, and Muğla, home to the Symi War Memorial and Ucanbalik Dalis ve Doga Sporlari.
Here are some key details:
| Attribute | Detail |
|---|---|
| Capital | Ankara |
| Largest City | Istanbul |
| Official Language | Turkish |
| Government | Unitary presidential constitutional republic |
| President | Recep Tayyip Erdoğan |
| Population (as of December 2023) | 85,372,3771 |
| Currency | Turkish lira (₺) (TRY) |
Top FAQs
Who was the previous governor of the Central Bank?
The previous governor of the Central Bank of the Republic of Turkey was Hafize Gaye Erkan, who resigned on February 2, 2024, after less than a year in office1. She was the first woman to hold the position. She was replaced by Fatih Karahan, the former deputy governor.
What is the role of the Central Bank in Turkey?
The role of the Central Bank in Turkey is to conduct monetary and exchange rate policies, manage international reserves, print and issue banknotes, and regulate payment systems. The primary objective of the Central Bank is to achieve and maintain price stability, which means keeping inflation low and stable. The Central Bank also has a complementary objective of ensuring financial stability, which means preventing disruptions in the financial system.
What is the current exchange rate of Turkish lira to US dollar?
According to the latest data from Bing, 1.00 TRY is equal to 0.033 USD1. This means that one Turkish lira can buy about three US cents. The exchange rate fluctuates over time, so you can check the current rate anytime using Bing’s currency converter.
How does Turkey’s political situation affect its economy?
Turkey’s political situation has a significant impact on its economy, as it influences the country’s macroeconomic stability, institutional quality, investor confidence, and international relations. Some of the main effects are:
- Authoritarianism
Turkey has become more authoritarian in recent years, with political power tightly concentrated with the President. This has eroded the independence and effectiveness of key institutions, such as the judiciary, the media, and the central bank. It has also increased the risk of policy uncertainty, populism, and corruption.
- Economic vulnerability
Turkey’s economy relies heavily on external financing, as it runs large and persistent current account deficits. This makes it vulnerable to sudden changes in market sentiment, exchange rate fluctuations, and external shocks. Turkey also faces high inflation, high unemployment, and high public debt, which limit its fiscal and monetary policy space.
- Conflictual foreign policy
Turkey’s foreign policy has become more assertive and confrontational, as it pursues its interests in various regional and global issues, such as Syria, Libya, the Eastern Mediterranean, NATO, and the EU. This has strained its relations with many of its allies and partners, and increased the risk of sanctions, isolation, and military escalation.
These factors have contributed to Turkey’s economic slowdown and instability in recent years, and pose significant challenges for its future development and prosperity.
***
How does Turkey’s economy compare to other countries in the region?
Turkey’s economy is one of the largest and most dynamic in the region, but it also faces significant challenges and vulnerabilities.
Turkey’s economy has some strengths, such as its large size, high growth, and moderate tax burden, but it also has some weaknesses, such as its high inflation, high unemployment, and low economic freedom. Turkey’s economy is also highly dependent on external financing, which makes it vulnerable to exchange rate shocks and external crises. Turkey’s political situation also affects its economic performance, as it influences its institutional quality, investor confidence, and international relations.
Here are some key indicators to compare Turkey’s economy with other countries in the region:
GDP
Turkey’s nominal GDP in 2023 was $907.12 billion, ranking 17th in the world and 7th in Europe. Its GDP per capita was $10,674.50, ranking 78th in the world and 36th in Europe. By comparison, the average GDP per capita in the region was $8,462.40.
- GDP growth
Turkey’s GDP growth rate in 2023 was 5.3%, ranking 36th in the world and 9th in Europe. Its GDP growth rate in the past 5 years averaged 3.4%, ranking 57th in the world and 15th in Europe. By comparison, the average GDP growth rate in the region in 2023 was 3.9%, and in the past 5 years was 2.6%.
Inflation
- Inflation
Turkey’s inflation rate in 2023 was 72.31%, ranking 191st in the world and 44th in Europe. Its inflation rate in the past 5 years averaged 28.77%, ranking 189th in the world and 43rd in Europe. By comparison, the average inflation rate in the region in 2023 was 9.76%, and in the past 5 years was 7.32%.
- Unemployment
Turkey’s unemployment rate in 2023 was 13.1%, ranking 156th in the world and 38th in Europe. Its unemployment rate in the past 5 years averaged 12.9%, ranking 154th in the world and 37th in Europe. By comparison, the average unemployment rate in the region in 2023 was 10.4%, and in the past 5 years was 9.8%.
Economic freedom
- Economic freedom
Turkey’s economic freedom score in 2023 was 60.4, ranking 75th in the world and 35th in Europe. Its economic freedom score in the past 5 years averaged 59.8, ranking 77th in the world and 36th in Europe. By comparison, the average economic freedom score in the region in 2023 was 64.1, and in the past 5 years was 63.7.
***
How does Turkey’s economy compare to other emerging markets?
Turkey’s economy is one of the largest and most dynamic among the emerging markets, but it also faces significant challenges and vulnerabilities. According to the World Bank, Turkey’s nominal GDP in 2023 was $907.12 billion, ranking 17th in the world and 7th in Europe. Its GDP per capita was $10,674.50, ranking 78th in the world and 36th in Europe.
However, Turkey’s economy also suffers from high inflation, high unemployment, high public debt, and high external dependence, which have been exacerbated by macro-financial instability and political uncertainty.
Some of the main factors that differentiate Turkey’s economy from other emerging markets are:
- Integration with Europe
Turkey has a customs union agreement with the European Union, which is its largest trading partner and source of foreign direct investment. Turkey also benefits from the anchor provided by its EU accession process, which has spurred reforms and institutional development. However, Turkey’s relations with the EU have deteriorated in recent years, due to political and diplomatic disputes, human rights issues, and the refugee crisis.
- Public finances
Turkey has achieved fiscal discipline and debt sustainability in the aftermath of the 2001 crisis, which allowed it to move from debt service to public service. Turkey has also improved its public financial management, tax administration, and social protection systems, with the help of the World Bank and other international partners. However, Turkey still faces fiscal pressures from rising public expenditures, especially on pensions, health care, and subsidies.
Private sector dynamism
Turkey has a vibrant and diversified private sector, which accounts for about 70% of GDP and 80% of employment. Turkey has also improved its business environment, innovation capacity, and competitiveness, thanks to market-friendly policies and structural reforms. However, Turkey still faces challenges in enhancing productivity, quality, and value-added in its private sector, as well as in reducing informality, inequality, and regional disparities.
These factors illustrate the strengths and weaknesses of Turkey’s economy in comparison with other emerging markets.
***
How does Turkey’s economy compare to other G20 countries?
Turkey’s economy is one of the largest and most dynamic among the G20 countries, but it also faces significant challenges and vulnerabilities. According to the World Bank, Turkey’s nominal GDP in 2023 was $907.12 billion, ranking 17th in the world and 7th in Europe. Its GDP per capita was $10,674.50, ranking 78th in the world and 36th in Europe.
However, Turkey’s economy also suffers from high inflation, high unemployment, high public debt, and high external dependence, which have been exacerbated by macro-financial instability and political uncertainty.
Some of the main indicators that compare Turkey’s economy with other G20 countries are:
- GDP growth
Turkey’s GDP growth rate in 2023 was 5.3%, ranking 36th in the world and 9th in Europe. Its GDP growth rate in the past 5 years averaged 3.4%, ranking 57th in the world and 15th in Europe. By comparison, the average GDP growth rate of the G20 countries in 2023 was 4.1%, and in the past 5 years was 2.9%.
- Inflation
Turkey’s inflation rate in 2023 was 72.31%, ranking 191st in the world and 44th in Europe3. Its inflation rate in the past 5 years averaged 28.77%, ranking 189th in the world and 43rd in Europe. By comparison, the average inflation rate of the G20 countries in 2023 was 5.6%, and in the past 5 years was 4.2%.
- Unemployment
Turkey’s unemployment rate in 2023 was 13.1%, ranking 156th in the world and 38th in Europe. Its unemployment rate in the past 5 years averaged 12.9%, ranking 154th in the world and 37th in Europe. By comparison, the average unemployment rate of the G20 countries in 2023 was 7.8%, and in the past 5 years was 7.3%.
- Economic freedom
Turkey’s economic freedom score in 2023 was 60.4, ranking 75th in the world and 35th in Europe. Its economic freedom score in the past 5 years averaged 59.8, ranking 77th in the world and 36th in Europe. By comparison, the average economic freedom score of the G20 countries in 2023 was 64.9, and in the past 5 years was 64.6.
Turkey’s economy is also highly dependent on external financing, which makes it vulnerable to exchange rate shocks and external crises. Turkey’s political situation also affects its economic performance, as it influences its institutional quality, investor confidence, and international relations.
(India CSR)
