Under the title "Economic Decline and Warnings of the Central Bank Yielding to Erdogan," the Al Arabiya website reported that the Turkish lira continues its decline, recording a drop to its lowest levels yesterday, confirming its classification as the worst-performing emerging market currency in 2021. It lost about four percent of its value, reaching 10.36 against the dollar, but later regained a slight portion of its losses ahead of a scheduled meeting tomorrow (Thursday) of the Turkish central bank, where it is anticipated that interest rates will be reduced for the third consecutive month.
**Erdogan's Pressures**
Many financial analysts attribute the reasons for this situation to the economic policies pursued by Turkish President Recep Tayyip Erdogan, as well as the continuous pressures exerted by Erdogan on the central bank to lower business costs to stimulate growth, despite its theoretical independence. While these policies have put the Turkish economy on track to achieve an economic expansion of 10 percent this year, they have, conversely, driven the annual inflation rate to about 20 percent, with the lira losing more than a quarter of its value against the dollar this year.
In this context, Jason Tuvey, an analyst at Capital Economics, stated to AFP that "there are increasing risks that the continuous acquiescence of the central bank to Erdogan's pressures to lower interest rates could lead to a significant and uncontrolled deterioration of the currency in the coming days and weeks."
**"To Win a Second Term"**
Emerging markets expert Timothy Ash noted that Erdogan, whose popularity has plummeted to near its lowest levels during his 19 years in power, has decided to achieve rapid economic expansion at any cost, which will assist him in winning a new presidential term in the upcoming elections in 2023. In a memo to clients, Ash indicated that "it is interesting that Erdogan's team believes that growth and job creation, rather than lowering inflation, will help him win in the upcoming elections." It is worth mentioning that the economic situation in the country has sparked a wave of criticism against the policies pursued by the Turkish president. Opposition parties have repeatedly launched sharp critiques against Erdogan and his party, holding them responsible for the deterioration of the economic situation in the country.
