Part 5/9:
The root cause of Turkey's economic failures can largely be attributed to President Erdogan's unorthodox economic approach. He has consistently argued that high interest rates lead to inflation—a claim that contradicts mainstream economic theory. While many nations raise interest rates to control inflation, Turkey has attempted the inverse, which has only exacerbated the crisis.
The government’s dismissal of multiple central bank governors who opposed these policies has led to a severe lack of investor confidence. Major rating agencies have downgraded Turkey’s debt to junk status, leading to a considerable drop in foreign direct investment. As the value of the LRA continued to plummet, the ripple effects became increasingly severe, particularly affecting the middle and lower-class citizens.