Economy and business
Turkish lira falls back to record lows
Turkey's economic outlook is critical. Inflation has soared by 20 % in recent weeks, increasing the cost of living for many Turkish families, while the lira has hit record lows. The national currency has lost more than 40 % of its value against the US currency; one dollar is now equivalent to 13.95 Turkish lira.
In the midst of this dire situation, Turkish President Recep Tayyip Erdogan has appointed a new finance minister. Nureddin Nebati, a trusted confidant of the president, will replace Lufti Elvan following his resignation. Elvan had been minister since November 2020, after Erdogan's son-in-law Berat Albayrak resigned from the post. The former minister held the post of deputy prime minister between 2015 and 2016.
Nebati, 57, holds a degree in Public Administration and a PhD in Political Science and Public Administration from Kocaeli University, as well as a Master's degree in Social Sciences from Istanbul University. The new minister will have to manage and present solutions that can address the country's deep economic crisis. This is not the first change in the economic sphere. Since 2019, Erdogan has dismissed three governors of the Turkish Central Bank who refused to lower interest rates. In particular, the dismissal of Naci Agbal drew criticism from international investors and economists.
In addition to Nebati's appointment, Ankara has put forward other measures to curb the lira's plunge, such as intervention in foreign exchange markets. The Turkish central bank has announced that it will "intervene directly in the market through sale transactions due to unhealthy price formations in the exchange rate". Despite the government's plans, economists have pointed out that inflation will continue to rise.
This financial situation has caused Erdogan's popularity to plummet. The prestige of the Justice and Development Party (AKP) has reached an all-time low in the past month, according to national polls. The Turkish population has also taken to the streets to express their discontent with the government's economic policies. Erdogan, however, has blamed "agents from abroad" for the lira's devaluation against other international currencies. "There are foreign agents who are not attacking, trying to discredit our struggle for economic liberation. But no matter what they do, we will not abandon our economic programme," the Turkish president said in the city of Izmir, according to Sputnik news agency. In recent weeks, Erdogan has even spoken of an "economic war". Despite the president's statements, thousands of citizens have continued to demonstrate in cities such as Istanbul and Ankara.
The political opposition has also echoed the economic uncertainty. Kemal Kiliçdaroglu, chairman of the Republican People's Party (CHP), claimed last week that Erdogan and his supporters have only one goal: "to impoverish Turkey". "Every time the Turkish lira lost value, Erdogan was happy for those who had dollar accounts," he said, accusing the president of serving the interests of the privileged classes. Kilicdaroglu and Meral Aksener, chairwoman of the Iyi Party, proposed early elections last month, but Erdogan rejected the proposal, asking voters not to be attracted to the opposition.
As reported by Al Arab, some polls have predicted Erdogan's defeat in the upcoming elections, with the mayors of Istanbul and Ankara, Ekrem Imamoglu and Mansur Yavas, both from the CHP, being highlighted as possible candidates in the second round.
On the other hand, Seda Demiralp, a professor of political science at Istanbul University, points out that "the AKP has lost 40% of its supporters since the 2018 elections", although she also recalls that "around 10% are confused". For this reason, Demiralp stresses that "the opposition must make great efforts to convince them of the seriousness of its economic policy". However, she also considers that the opposition "must make sure that it does not pose a threat to the way of life of conservative voters".
