As the Turkish lira collapses, inflation rises and ordinary Turks take to the streets against Erdogan

The bottom under the Turkish currency continues to fall with a further 15 per cent decline. Since the start of the year, the lira has lost 42 per cent of its value. President Erdogan insists on interest rate cuts and exports to "win the war of economic independence”, but at home, a rising cost of living is weighing heavily, sparking protests in Istanbul, Ankara, and other cities.

Istanbul (AsiaNews) – The Turkish lira continues its race to the bottom, starting off the week with a further drop of 15 per cent recorded yesterday after President Recep Tayyip Erdogan vowed to continue cutting interest rates and “win the war of economic independence”.

In fact, government policies have come in for harsh criticisms from several fronts, while ordinary Turks begin to take to the streets in Istanbul, Ankara, and smaller cities, disappointed by the rise in prices and the collapse of the purchasing power of wages.

The current situation is the mirror of a crisis that began a few years ago, marked by the end of Erdogan’s economic miracle, and his turn to a policy of nationalism and Islam designed to maintain support.

Such a situation is compounded by the negative impact of the COVID-19 pandemic, which saw tens of thousands of businesses go under in the first months of the current year.

Likewise, the national currency lost 42 per cent of its value so fa this year, a record 22 per cent decline in the last week alone, the worst performance for a currency globally, hitting 13.45 against the dollar before closing at 12.7.

Despite this, President Erdogan has held firmly to a policy of low interest rates to fuel exports, encourage investment from abroad and boost employment, while the inflation rate reached almost 20 per cent.

The Turkish leader has also been vocal in his attacks against those who have criticised the ruling Justice and Development Party (AKP) and government economic policy.

The policy has led to soaring inflation (highest level in last three years), four times higher than the Central Bank’s forecast.

Erdogan wants to maintain and strengthen an easy monetary policy, focusing on investments and exports to push growth so as to be in a position of strength ahead of presidential and parliamentary elections of 2023.

In recent months, the president has not hesitated from removing anyone who has tried to stop him, including six senior dissenting officials and three governors and deputy governors of the central bank, but on the long run, he is putting the country at risk.

One of the president’s fiercest critics is former bank deputy governor Semih Tumen, who has described government monetary policy as an “irrational experiment which has no chance of success" and “must be abandoned immediately” in favour of a more conservative approach that protects the currency and "the prosperity of the Turkish people".

Looking at GDP and exports, the president’s choice seems to be successful with soaring exports that topped US$ 200 billion for the first time. And economic growth this year could reach 9 per cent, second highest among G20 countries after India.

However, the other side of the coin are rising economic and social inequalities, which have reached a ten-year high, skyrocketing prices for homes and basic necessities (including food) and consumer confidence at a low point.

And, as always, the most disadvantaged classes will lose the most, followed by a middle class that risks becoming more and more impoverished, which explains why it is back protesting in the streets.

• turkey
• economy
• lira
• crisis
• covid-19
• pandemic
• recep tayyip erdogan
• islam
• opposition
• protests