The Intelligence from The Economist You bet your dollar-bottomed: Erdogan’s next gambit
Dec 28, 2021
Piotr Zalewski, The Economist's Turkey correspondent, delves into President Erdogan's controversial monetary policies aimed at saving the lira, which put the Turkish taxpayer in a precarious position. Meanwhile, Tom Rowley discusses the fascinating insights from the Mass Observation Project, highlighting everyday challenges faced by British citizens. The podcast also touches on Saudi Arabia's massive leap into the film industry, showcasing the drastic cultural shifts as it moves from a cinema ban to nurturing an international film hub.
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Erdogan's Economic Experiment
- Erdogan's economic policies are causing inflation in Turkey.
- He blames high interest rates, leading to a lira devaluation spiral.
Lira's Devaluation and Erdogan's Intervention
- The lira lost nearly 50% of its value against the dollar in two months due to Erdogan's interest rate cuts.
- Erdogan introduced a plan to compensate lira deposit holders if depreciation exceeds interest rates.
Shifting Risk
- Erdogan's plan temporarily stabilized the lira but shifted the risk from depositors to taxpayers.
- The central bank sold billions to prop up the lira, raising sustainability concerns.