“High inflationthe collapse of the pound and the growing government deficit are likely to exacerbate the economic crisis in Türkiye“, claims German economist Norbert Tofal after re-election Erdogan. “A weak lira makes imports to Turkey more and more expensive, further fueling inflation. Importing less goods will not work either, Turkey’s dependence on imports is too high, ”adds Tofal in an interview with Der Spiegel magazine.

Erdogan, the economist continues, “thinks he can bypass economic laws. But that won’t work either. This is already evident in the reaction of the financial markets after his re-election. The Turkish lira immediately fell to an all-time low.” Foreign exchange reserves have fallen sharply. “The increase in exports, for which foreign exchange comes, or tourism is unlikely to be able to compensate for the lack of foreign exchange. Capital controls are likely to be expanded. This could lead to a balance of payments crisis,” says Tofal.

Turkey’s debt may be around 35 percent of gross domestic product (GDP) – lower than most eurozone countries – but private debt in Turkey is 180 percent of gross domestic product, “a huge amount,” Tofal said. “Debtors have almost no reserves or ability to borrow money abroad because debt service is getting more expensive as the pound sterling falls.”

“Erdogan himself says that the Gulf countries have supported the pound, and there are also rumors that he can attract funds from Russia,” the economist analyzes. “But for how long and under what conditions will these countries be ready to resolve Turkey’s current account deficit? Of course, there is a risk of bankruptcy of the Turkish state. However, it is difficult to predict when this will happen. But if this happens, it will be interesting to see how Erdogan reacts,” the economist concludes.