Turkey facing economic turmoil under Erdogan

The Turkish government, led by President Recep Tayyip Erdogan, is facing a new crisis as economic risks are mounting, especially after the World Bank cut the country’s growth forecasts.

The World Bank has forecast the Turkish economy to slow down with a decline in the lira. It said the Turkish economy would grow at – 2.6 percent.

Turkey’s economy has been hit by a financial crisis with a decline in the lira. Last year, the lira lost 30 percent of its value, and it is down 15 percent so far this year.

The lira has been hit hard after the US doubled tariffs on Turkish steel and aluminum. The Turkish authorities detained a US minister on allegations he had taken part in a failed coup in 2016.

However, the Turkish authorities released him.

The Turkish economy collapsed in 2001 as the lira fell to 1.5 million versus the US dollar. Since 2003, Erdogan has worked on boosting the economy via relying on bank loans and financial facilities.

However, mammoth debts hit the Turkish economy in 2017. Growing government spending has exacerbated the economic turmoil.     

Bloomberg experts said: “Turkey was one of the fastest-growing emerging economies in 2017, but its growth wasn’t balanced. Excess government spending and rapid credit growth caused imports to surge and the current account deficit to widen. Unsurprisingly, the economy is paying the price for past excesses.”

The Turkish economy has been shrinking. It fell to 2.6 percent in Q1 2019. The economic recession has continued, especially as the lira has been weakening since August.