Following President Recep Tayyip Erdogan’s re-election, the Turkish lira hit an all-time low, signaling that currency markets are not optimistic about the country’s economic future under the long-term leader. The lira experienced its worst trading day in eight months, falling to 20.01 to the US dollar on Monday. Meanwhile, Turkish stocks increased as Erdogan entered his third decade in power, with the BIST-100 index up by 4.1% and the banking index up by 2.13%.

The lira’s record low reflects the country’s struggle with a cost-of-living crisis and depleted foreign reserves. Despite Erdogan’s promises to reduce inflation and boost economic growth, his unorthodox economic policies are expected to have a negative economic outlook, according to some analysts. Erdogan’s push for interest rate cuts caused the devaluation of the lira in late 2021 and led to inflation hitting a 24-year high of 85.5% last year. Turkey’s struggling economy, compounded by the devastating double earthquakes in February, was a significant obstacle to Erdogan’s re-election prospects. Despite this, the President has defended his economic policies and reassured Turks that investment, production, exports, and an eventual current account surplus will drive up Turkey’s gross domestic product.

Recovering from a cost-of-living crisis and depleted foreign reserves is a complex task that requires a multifaceted approach. One way Turkey can begin to recover is by implementing sound economic policies that foster investment and increase productivity. Another way would be to address the country’s high inflation rate, which has been a major problem in recent years. To do this, Turkey may need to raise interest rates, which could strengthen the lira and reduce inflation. Additionally, the country could work to increase its foreign reserves by encouraging foreign investment and increasing exports.

Turkey could also seek financial assistance from international organizations such as the International Monetary Fund, which could provide aid and help stabilize the economy. Finally, Turkey could focus on rebuilding and investing in areas affected by the country’s devastating double earthquakes, which could help create jobs and stimulate economic growth. Overall, Turkey’s economic recovery will require a combination of measures to address multiple challenges, and it will likely take time and sustained effort to achieve meaningful progress.