(File) Turkish President Recep Tayyip Erdogan. AP
Turkey’s economy has been in turmoil in recent years, reflecting the uncertainties and contradictions plaguing the political landscape. President Recep Tayyip Erdogan’s economic policies, known as “Erdogan-omics,” have come under intense scrutiny as the country faces soaring inflation and a plummeting currency value.
Inflation nightmare
Turkish consumers are bearing the brunt of the country’s economic downturn, as evidenced by the staggering inflation figures released recently. Inflation has soared to unprecedented levels, with Turkey’s consumer prices increasing by a staggering 67 percent. This surge has exceeded even the most pessimistic forecasts, exacerbating the financial burden on ordinary citizens.
A closer look reveals that the impact of inflation is widespread across different sectors of the economy. Spending on basic necessities like education, healthcare, transport and hospitality have all seen alarming price hikes. Education costs have skyrocketed by 91%, while healthcare and transport have risen by 81% and 78% respectively. Even hospitality services have seen a staggering increase of nearly 95%, with no aspect of daily life being spared from the economic crisis.
The Lira’s Plummet
At the root of Turkey’s economic crisis is the steep decline of the Turkish lira, the currency that has lost a staggering 40% of its value in the past year alone, and a staggering 82% in the past five years. This sharp decline in the value of the currency is adding to inflationary pressures, compounding the challenges facing Turkish consumers and businesses.
At the root of Turkey’s economic woes is President Erdogan’s unorthodox approach to monetary policy, which he sees as “un-Islamic,” preventing the central bank from tackling inflation. After initially resisting, he eventually caved to pressure and approved a series of interest rate hikes, bringing the cumulative increase since May 2023 to 3,650 basis points. But the central bank’s recent decision to halt further rate hikes has raised questions about the government’s commitment to tackling inflation head-on.
Political calculations and economic influence
Erdogan’s economic policies cannot be separated from the political context in which they are applied. With local elections looming, President Erdogan is under pressure to deliver concrete economic results to solidify party support. However, his tendency to prioritize short-term political gains over long-term economic stability has only exacerbated Turkey’s economic problems. The instability of Erdogan’s policies has eroded investor confidence, leading to a significant decline in foreign investment in Turkey.
Against a backdrop of economic turmoil, Turkey has embarked on a massive military spending spree, allocating a staggering $40 billion to defense spending. This surge in military spending reflects President Erdogan’s desire for Turkey to project itself as a regional power. But critics argue that this defense spending spree comes at the expense of addressing the country’s more pressing economic problems, exacerbating the country’s fiscal difficulties.
As Turkey struggles with the effects of Erdogan’s economic mismanagement, the path forward remains fraught with uncertainty. The country finds itself at a crossroads, torn between competing political ideologies and economic imperatives. Erdogan’s obsession with consolidating power and projecting himself on the international stage has come at a heavy cost, plunging Turkey into financial, political and religious limbo. Only by embracing sound economic principles and prioritizing the welfare of its people can Turkey hope to weather these rough waters and emerge stronger on the other side.
The opinions expressed in the above article are solely those of the author and do not necessarily reflect those of Firstpost.
