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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.
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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.

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