Stocktake: Erdogan fighting a losing economic battle

Turkish lira lost as much as 15% against the dollar last Tuesday

Turkey is fighting an "economic war of independence", according to president Recep Tayyip Erdogan.

If so, it’s a war he – or rather, Turkey’s hard-pressed citizens – is losing. The Turkish lira has been in freefall, losing as much as 15 per cent against the dollar last Tuesday.

Erdogan refuses to acknowledge economic reality. High interest rates don’t bring inflation under control, he insists; they cause it to rise. Disobedient central bankers get fired (Turkey’s Central Bank is on its fourth governor since 2019); thus, Turkey is cutting rates, even with inflation running at 20 per cent. In the past, Erdogan has threatened to “throttle” and “choke” critical “speculators”.

That rhetoric continues, with investors calling for rate increases described as “opportunists”, “global financial acrobats” and “doomsayers”.


Turkish stocks trade on just 7.5 times earnings, but bargain hunters have to deal with the fact that a clueless autocrat is running the central bank.

It is, as BlueBay Asset Management's Timothy Ash noted last week, "like getting a bus driver in to do brain surgery".