In mid-2021, Türkiye introduced the Turkish Economic Program (TEP) to boost production, investment, employment, and exports. To support these goals, the central bank slashed its key rate from 19% to 8.5% between September 2021 and May 2023. Consequently, the Turkish lira lost nearly 60% of its value against the dollar during this period, and inflation surged from 19.3% in August 2021 to 85.5% in October 2022.

Despite the TEP’s initial aims, the depreciation of the lira did not yield the expected improvements in the current account. From 2021 to 2023, Turkish exports rose by 13.4% in nominal terms, while imports increased by 33%, resulting in a trade deficit of $106 billion (9.5% of GDP) in 2023, which is $60 billion more than the 2021 deficit of $46 billion (6% of GDP).

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