Is Turkey heading towards recession?

After the failed coup d’état staged in Turkey in 2016 against state institutions, including the government and President Recep Tayyip Erdoğan, Erdoğan grew insecure as it shook his confidence and made him aware of how much remained outside of his control.Turkey’s democracy suffered even more after the “coup”. In an unprecedented move to cement his position in the recent elections, he used populist tactics and labeled the opposition as “terrorists”.Unfortunately, Turkish economy got badly crushed in the entire process.

Erdoğan’s blocked interest rate rises, increased prestige infrastructure expense and ignored rising debt levels, exhausted the Turkey’s economy. It made Turkish lira hit a record low against the dollar, placing it among the worst-performing currencies in the world. The country’s central bank has blamed Erdoğan for pressurising it to keep the interest rates low. Eventually the bank had to use a third of its foreign reserves to prop up the currency during the three-week period leading to local elections.

It doesn’t end here, as the economy has had to face a sky rocketing inflation. It led to a staggering drop in the purchasing power of the consumers. According the country’s statistical authority’s statement (released in February), consumer prices rose to 1.06 in January, bringing the annual inflationrate to 20.35 percent. Besides food crisis and shortage in household staples, the nation also faced major unemployment, which has reached 13%, the highest in a decade where as youth unemployment is even higher at 30%.

Marcus Chenevix, global political research analyst at TS Lombard told CNBC, “The government has no intention of tackling imbalances or overheating. It is this unwillingness to act that leads us to believe that we can now say that Turkey is entering a slow burning crisis.”

On the domestic front, Turkey has been battling major economic crisis and on the international front, an existential crisis. Due to Erdogan’s policies country has been drifting away from US and also got suspended from contesting for EU membership based on concerns about freedom of speech and freedom of assembly.

Instead of taking hard decisions to put the derailed economy back on track, Erdogan blamed the United States and Jewish bankers for Turkey’s financial collapse.

Again, the public rageis soaring over and what is adding fuel to fire is Erdogan’s increasing sympathy towards despots all around world, Venezuela being the recent. Also, his impractical monetary policies has shaken the trust of people in him. Unless Erdogan fixes Turkey’s economy and rebalance its international relations, the leader who has been heading the nation since 2013, might be nearing the end of his political career.

 

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