Economic policy reversal fraught with political risks for Erdogan
Ankara’s bid to warm the pandemic-hit economy has backfired, forcing a policy reversal that threatens to aggravate popular grievances and heighten political risks for Erdogan.
Unrelenting inflation and the uncontrollable slump of the Turkish lira have forced Ankara to start cooling the economy, only two months after it spurred a loan bonanza to revive consumer demand and breathe life into pandemic-ravaged businesses. The abrupt reversal heightens political risks for President Recep Tayyip Erdogan as he faces growing popular frustration over economic woes that have only worsened since a severe currency shock in 2018.
The lira took another dramatic nosedive Aug. 6-7, forcing the central bank to begin curbing liquidity and heralding the end of the fledgling attempt to warm up the economy.
