The lira has already lost 40% of its value in the past month. On Friday, the currency fell another 20%, before settling at being down 14% from Thursday’s level.
The result is that any imported item now costs two or three times as many liras as they did a few months ago. The inflation rate is above 15%.
Many economists had been predicting for months that Erdogan’s actions would lead to a currency crisis, which is what’s happening now. There are concerns that unless Erdogan adopts sensible policies, the result will be a full-scale national economic crisis.
During the campaign for the June 24 elections, Erdogan said the following:
“If my people say continue on this path in the elections, I say I will emerge with victory in the fight against this curse of interest rates. Because my belief is: interest rates are the mother and father of all evil.”
In July he appointed his son-in-law, Berat Albayrak, to run the central bank, and said, “We will see inflation and interest rates decline in the coming period.” …
We’ve seen this kind of thing in other countries. In Venezuela, Hugo Chávez and Nicolás Maduro followed and are following policies which have meant economic destruction for their country. In Zimbabwe, Robert Mugabe’s policy of throwing white farmers off farms and giving the farms to political cronies who know nothing about farms ended up destroying Zimbabwe’s economy, and it’s unclear whether this policy is still continuing. I’ve written about many other examples where a clueless idiot leader politician destroys a country’s economy and the country itself.
hat-tip Stephen Neil