Global Courant 2023-05-29 03:00:36
Inflation in Türkiye remains stubborn at 44%. Consumers have seen their paychecks buy less and less food as the months go by. And now, government largesse and efforts to prop up the currency threaten economic growth and could push the country into recession.
It is a difficult challenge for President Recep Tayyip Erdogan, the winner of the election, because his policies, including some aimed at securing his re-election, have exacerbated the problems.
“The relatively strong economy in recent quarters has been the product of unsustainable policies, so a contraction or recession is most likely,” said Brad W. Setser, global finance and trade expert at the Council on Foreign Relations.
During Erdogan’s first 10 years in power, he oversaw spectacular economic growth that transformed Turkish cities and lifted millions out of poverty. But some of those gains have eroded in recent years.
The national currency has lost 80% of its value against the dollar since 2018. And annual inflation, which hit more than 80% at its peak last year, is down but was still 44% last month, leaving many feeling poorer.
While economic orthodoxy often calls for raising interest rates to combat inflation, Erdogan has insisted on doing the opposite, repeatedly lowering them, which economists say has exacerbated the problem.