Thursday, September 7, 2023

what caused the economic crisis in Turkey?

 The economic crisis in Turkey is caused by a combination of factors, including excessive current account deficit, large amounts of private foreign-currency denominated debt, and President Erdogan's unorthodox ideas about interest rate policy

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 Erdogan insisted on keeping Turkish Central Bank interest rates relatively low, believing that low interest rates would cap inflation, which led to high inflation rates and a depreciating lira
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 The decreasing value of the lira has caused intense and pervasive economic challenges, including rising prices for consumer goods and gas
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 The crisis has also been exacerbated by Erdogan's increasing authoritarianism and geopolitical frictions with the United States
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 Additionally, Turkey's economy is facing deeper structural issues, such as a devaluation spiral and a current account deficit that reached a record level
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 The combination of these factors has led to a self-inflicted economic crisis of high inflation and a cost of living crisis that is affecting millions of Turks
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