The recent government data indicate that Turkish economy is suffering from a high two-digit inflation. Independent researchers, on the other hand, point to a much higher figure—between 100% and 180%—making Western inflation numbers look trivial by comparison.
The Turkish Lira has lost half of its value since this time last year, due to President Erdoğan’s “unorthodox fiscal policy.” Under Erdoğan’s influence, the Central Bank has cut interest rates from 19% to 10.5% this month. But at no trivial cost. Everytime the Central Bank went for rate cuts, the Lira suffered a major crash and rocketed inflation further and further up. The independence of government institutions has been eroding over the last 20 years under the AKP rule. This trend has been exacerbated since President Erdoğan positioned himself as the de facto governor of the nation’s monetary policy.
The parliament, controlled by Erdoğan’s party and its coalition partner, serves largely as a rubber stamp on expenditures, which are poised to leave a monumental deficit in the budget by the end of this year. However, this is far from an isolated incident in Turkey. Turkish economy is no stranger to economic turmoil. And to Dr. Kamil Yılmaz, the Central Bank’s compromised independence, a plummeting Lira, and an excruciating inflation rate are merely the things of the past that he doesn’t remember very fondly, but the symptoms of an ailing economy that he knows all too well.
Watch Dr. Kamil Yılmaz walk Murat Türsan through the last decade of Turkish economy here.
