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HomeArchiveEconomic challenges persist despite President Erdogan's victory in the presidential elections

Economic challenges persist despite President Erdogan’s victory in the presidential elections

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Turkish President Recep Tayyip Erdogan won a landslide victory in the presidential elections on Sunday, but the country’s economic challenges remain.

On Monday, the Turkish lira reached new record lows against the US dollar, falling to 20.065 TRY/USD. The Turkish economy is grappling with high inflation, which is currently at 73.5%. The lira’s value has significantly decreased in recent years, making it more expensive for Turks to import goods and services.

Since the currency crisis in 2021, Turkish authorities have actively intervened in the foreign exchange markets to influence the lira’s value. However, these interventions have primarily led to the depreciation of the Turkish currency and the gradual reduction of foreign exchange and gold reserves.

It is expected that President Erdogan’s victory in the elections could further increase the pressure on the Turkish lira. Chief Strategist at Rabobank, Benjamin Picton, warns that “the lira is likely to remain under pressure in the near term, as President Erdogan’s policies are seen as being inflationary and damaging to the Turkish economy.”

Despite the economic challenges, Turkish stocks enjoyed growth following the elections. The BIST-100 index rose by 3.5%, and the banking index increased by over 1%. However, in recent years, foreign investors owning Turkish stocks have gradually reduced their share in the Turkish market. This indicates that local investors are gaining dominance in the market. The trend suggests that foreign investors have less interest in the Turkish market due to the economic challenges.

Overall, Turkey’s economic challenges remain significant despite President Erdogan’s victory in the presidential elections. The depreciation of the lira and the high inflation rate are significant concerns for Turks, and it is unclear how President Erdogan will address these issues.


Photo: Envato Elements

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