Thursday, September 7, 2023

is turkey still in economic crisis?

 Turkey is currently facing an economic crisis with high inflation rates and a depreciating lira. Inflation in Turkey averaged 34.76% from 1965 until 2023, and it is expected to be 32.20% by the end of this quarter

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 The annual inflation rate in Turkey fell for a fifth consecutive month to 50.5% in March of 2023
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President Erdogan's economic policies have been criticized for failing to control the economic crisis and inflation. For a long time, Erdogan insisted on keeping Turkish Central Bank interest rates relatively low, believing that low interest rates would cap inflation
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 This unorthodox approach led to high inflation rates and a depreciating lira
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 Erdogan also tapped Central Bank foreign currency reserves to prop up the lira, which was a short-term gambit
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However, after the general elections in May, Erdogan's stance on interest rates seems to have changed. In late August, the Central Bank significantly hiked interest rates for the third time since the May elections, from 8.5% to 25% 
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 This move is expected to help temper inflation by limiting the supply of easy money in the economy and, in theory, prop up the country's currency
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 Despite these recent changes, it remains to be seen whether Erdogan's new approach will effectively control the economic crisis and inflation in Turkey.

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