With its onerous short-term debt burden, moribund currency, spiking inflation, and slow-motion monetary policy, Turkey has had its fair share of economic fires to put out over the past year. The most pressing of which has been a currency rout that shed some 40% of the lira’s value against the USD through 2018.
The Turkish central bank finally responded to the rout with a surprise rate hike last week, increasing the benchmark rate from 17.75% to 24%. Whether or not the decision was made by an independent central bank committee or President Erdogan is a matter of speculation.
But a rate hike alone was never going to be enough to revive market confidence given Turkey’s longstanding economic issues. Enter finance minister and presidential son-in-law Berat Albayrak, who earlier this week revealed a package of economic reforms meant to put the Turkish economy back on a healthy track.
Will it be enough? Or is the worst yet to come for one of the world’s most indebted emerging markets?