Turkey's economy is spiraling — and a new election will make things worse


It’s “a source of pressure on the currency as it raises the risk that the government continues to be distracted by the elections” at a time when Ankara should be providing “more details around the fiscal program, plans to boost net (foreign exchange) reserves, transparency around the recap of the banking sector and inflation numbers needed to stabilize sentiment around Turkey,” she told CNBC on Wednesday.

Erdogan has espoused keeping interest rates down despite rising inflation, currently at more than 19 percent. Investors fear he will continue to pursue populist monetary policy after his party’s unprecedented defeat in the local elections.

But more than the election results themselves, it is the substance of an economic reform package that is needed to calm markets, experts say. That effort has so far not gone well.

Of note, an investor discussion with Turkish Finance Minister Berat Albayrak during the IMF Spring Meetings in Washington DC last week received decidedly negative reviews.

Investors described Turkish officials as unprepared and lacking details, and a J.P. Morgan survey carried out during the event revealed that more than 80% of investors did not have confidence in Ankara’s ability to turn things around.

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