As President Recep Tayyip Erdogan faces Turkey’s worst economic crisis in almost two decades, he is doing so with few independent-minded experts at his side — a consequence of his own efforts to centralize power, which have left Turkish financial institutions that the president once deferred to sidelined or hollowed out, economists say.
Now, “that kind of interaction is very weak,” he said. Seasoned economists said they were in the dark about whom the president asks for advice and where the economy is headed. Erdogan has acknowledged the hardships caused by Turkey’s high inflation rate, calling it a “problem” while asserting that the country was better off than others around the world and insisting that its economic fundamentals are sound.
Kara, who joined the Central Bank in 2002, said that under the IMF program, which was mostly prepared by Turkish technocrats, the banking system was rehabilitated, and foreign direct investment increased as trust in Turkey’s institutions started to improve.“It was the best of all worlds,” he said, adding that Turkey’s economy was growing as inflation plummeted, from near 80 percent to 8 percent annually.
The situation started deteriorating gradually, economists said. Several key events occurred in 2013, notably the— which began as a sit-in to protest the destruction of an Istanbul park and grew into nationwide protests against Erdogan’s government. The unrest jangled the nerves of foreign investors and fed Erdogan’s fears of plots targeting him.
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