The mismanagement of Turkey's economy will have lingering effects
constitutional upheavals in 2016-17, when President Recep Tayyip Erdogan faced down an attempted coup and gathered up new political powers , the country’s economic reformers remembered better days. They talked wistfully of an imminent return to “factory settings”. Turkey, they believed, had a default set of successful policies, from which it had recently deviated and to which it could quickly revert, undoing any mistakes in between.
The crisis has, however, forced the government to reset its reckless macroeconomic policies. The appointment in July of Berat Albayrak, the president’s son-in-law, as finance minister did not bode well. But for the moment the family dynamic seems to be working in the economy’s favour, helping to reconcile Mr Erdogan to the need for monetary and fiscal restraint. The central bank was belatedly permitted to unholster its terrorist tools and raise interest rates.
But how long will it take for stability to translate into growth? An economy, unfortunately, cannot be reset as easily as a smartphone. Past mismanagement tends to become embedded in the circuits. The Turkish public, for example, will not quickly forget last year’s erosion in the value of the lira. They now hold nearly half of their deposits in foreign currency.
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