How Erdonomics Sank Turkey
Following years of mismanagement by an authoritarian president, Turkey's economy is reeling. Without new leadership or a course correction that includes a tighter monetary policy, Turkish households' economic prospects will continue to darken, and the impact on the country's stability will become impossible for others to ignore.
WASHINGTON, DC – Turkey’s economy is in crisis. Inflation is high and rising, economic growth is stalling, foreign-exchange reserves have plummeted, many goods are in short supply or simply unavailable, and low- and middle-income households are increasingly impoverished. With per capita GDP having fallen from $12,600 in 2013 to $8,500 in 2020, Turkey’s 85 million people have faced dimming economic prospects for the better part of a decade.
Although it receives far less attention than it deserves, Turkey is a geopolitically and economically significant country, sharing territorial or maritime borders with the European Union, Russia, and four Middle Eastern countries. It is the only Muslim-majority member of NATO, and has the Alliance’s second-largest military, after the United States. Its crisis matters far beyond its borders.
Turkey’s problems are almost entirely self-inflicted. President Recep Tayyip Erdoğan’s government has spent years hollowing out the country’s democratic institutions and sowing division within the population to suppress the rise of a united political opposition. Owing to the strong economic performance of previous years, Erdoğan’s Justice and Development Party (AKP) has been re-elected at every ballot since 2002. But that support has fallen sharply as a result of the deteriorating political and economic situation.