The viability of the Turkish government’s “new economic model” — a controversial policy to battle inflation without the central bank hiking rates — was already in doubt before Russia’s incursion into Ukraine. But it has clearly hit a deadlock now that the fallout of the war is undermining Ankara’s plans to bridge its current account deficit by promoting export-focused growth and steady its battered currency by safeguarding lira deposits.
With its annual consumer inflation already over 54%, Turkey stands to take some of the heaviest blows from the conflict as both Russia and Ukraine are among its major economic partners, with crucial links in tourism, agricultural trade, energy and even the defense industry.
