The Turkish lira has shed nearly half of its value against the dollar this year and inflation is spiraling skyward. For Turkey’s embattled economy, investors and economists fear it could get a lot worse before it gets better.
At the center of Turkey’s troubles are years of unorthodox economic policies championed by Turkish President Recep Tayyip Erdogan. Mr. Erdogan argues that higher interest rates stoke inflation and lower rates will cause inflation to ebb. This is the opposite of what economies around the world have experienced through history.