By slashing interest rates, even in the face of galloping prices, Recep Tayyip Erdogan had hoped to turbocharge his country’s economy. Things have not exactly gone according to plan
, which he had been blocking since last year. Turkey also banned the transit to Russia through its territory of goods under sanctions, a big source of friction with Turkey’s allies in. More recently, Mr Erdogan asked Mehmet Simsek, one of the architects of Turkey’s boom in the early 2000s, to rejoin his team. Mr Simsek, who had been replaced as the government’s economy tsar by Mr Erdogan’s son-in-law in 2018, demurred.
The government’s badly delayed response to the quakes dented support for Mr Erdogan and his Justice and Development party. But the scale of the tragedy has also turned what would by now have been a loud and aggressive election campaign into a more sombre affair. This comes as a boon to the opposition.
When it comes to the economy, the Turkish leader’s options are more limited. Over the past three months, the government has increased the minimum wage by 55%, more than doubled the basic pension, and passed a law making millions of Turks eligible for early retirement. Mr Erdogan may announce further handouts during the holy month of Ramadan, which began on March 23rd. His best hope, however, is that the economy, which grew by a sprightly 5.
To prevent the lira from plummeting further, however, Turkish officials have been rationing bank loans and selling tens of billions of dollars of foreign reserves, leaving the central bank’s coffers depleted. The lira, which has lost an astonishing 80% of its dollar value in five years, has now stabilised, but only at the expense of the very exporters Mr Erdogan’s model was expected to benefit. Turkish exporters now say the currency is overvalued, and is squeezing profits.
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