Why 2017 doesn’t bode well for Turkey’s economy(Al-Monitor, January 4, 2017)
SUMMARY : Official figures show the Turkish economy has plunged deeper into recession, as expected fourth-quarter…
Turkey’s economic turmoil will challenge newly reelected President Recep Tayyip Erdogan as uncertainty lingers on whether he will stick to his controversial economic policies or take a more orthodox path.
The country’s economic fragility, marked by a foreign currency crunch, a battered lira and high inflation, is widely blamed on Erdogan’s policy of cutting interest rates. His pursuit of that policy in the past two years has fueled an inflation storm and sunk the Turkish lira. To ease the crunch and prop up the lira, Ankara has relied on a costly deposit scheme and sought foreign currency support from Gulf countries and Russia, with the central bank burning through its international reserves.
Following Erdogan’s victory in Sunday’s presidential runoff, both domestic economic actors and foreign investors are eager to see whether he will change course or insist on what many see as an unsustainable path. In terms of mandate, he has a free hand, commanding sweeping executive powers and a comfortable majority in parliament.