Ahead of a critical election Turkey’s economy is running on borrowed time

VISITORS TO TURKEY are often surprised to discover that in a country supposedly consumed by economic malaise, the restaurants, at least in large cities, are bursting with customers. But appearances are deceptive. A big reason for the bustle is that middle-class Turks would rather spend their earnings today than watch inflation, officially measured at 55% year on year but widely believed to be much higher, burn through their savings tomorrow.

Turkey’s president, Recep Tayyip Erdogan, has bullied the central bank into slashing interest rates in the face of galloping prices, allowing the lira to plummet. He hoped this would turbocharge the economy by making exports cheaper and encouraging domestic production. The policy mix, repackaged as Turkey’s “new economic programme”, would bring inflation down to single digits ahead of this year’s presidential and parliamentary elections, his finance minister pledged. Things have not gone according to plan.