Date: 21 August 2026
Special Correspondent, SesTurkiye Desk
For decades, Turkey’s economic engine relied on a foundation of regulatory autonomy, technocratic governance, and institutional integrity. However, the gradual concentration of power under President Recep Tayyip Erdoğan—culminating in the formal adoption of the executive presidential system—has systematically dismantled those pillars. By stripping key bodies of their independence and centralizing decision-making within the presidential complex, the regime transformed routine policy management into a cycle of unpredictable mandates, shattered market trust, and entrenched structural economic crises.
The decline of the Central Bank of the Republic of Turkey (CBRT) serves as a primary example of state institutional erosion. Historically, monetary policy relied on independent central banks shielding benchmark interest rates from short-term political pressures. In Turkey, this boundary collapsed.
Driven by an unconventional economic doctrine asserting that high interest rates cause inflation, the executive branch repeatedly intervened in monetary governance. Central bank governors who attempted to raise interest rates to curb spiraling inflation or stabilize the lira were dismissed.
- Murat Çetinkaya (Sacked July 2019): Dismissed for refusing executive demands to cut benchmark rates.
- Murat Uysal (Sacked November 2020): Removed after overseeing significant lira depreciation while maintaining low borrowing costs.
- Naci Ağbal (Sacked March 2021): Sacked after briefly restoring foreign investor confidence by raising interest rates to conventional levels.
- Şahap Kavcıoğlu (Appointed March 2021): Installed to enforce rate cuts despite soaring consumer price inflation.
This rapid turnover undermined monetary credibility. Foreign investors viewed the frequent dismissals as a sign that monetary policy was subject to political dictates. Consequently, international capital shifted out of Turkish assets, triggering sustained currency devaluation and driving domestic inflation higher.
The constitutional referendum following the 2016 coup attempt reshaped Turkey's governance structure, consolidating executive authority into a powerful presidential system by 2018. This structural shift removed statutory checks and balances, transferring key economic regulatory powers directly to the presidency.
Under the executive system, long-term strategic economic planning was largely replaced by rapid, decree-based governance. Independent regulatory boards—covering banking, energy, procurement, and finance—saw their autonomous oversight authority reduced.
Decree-driven policymaking introduced significant unpredictability into the business environment. Unannounced changes to foreign exchange regulations, sudden taxation adjustments, and unexpected interventions in corporate management created operational friction for local and foreign investors. Without independent institutional oversight to test or delay proposed policies, economic strategy was frequently adjusted to meet immediate political priorities, complicating long-term investment planning.
Beyond monetary policy and executive centralization, hyper-centralization altered the role of state statistical agencies. Public trust in official economic statistics released by the Turkish Statistical Institute (TÜİK) declined over time.
As official consumer price index (CPI) figures diverged from everyday living costs, independent research bodies—such as the Inflation Research Group (ENAG)—began publishing alternative economic metrics. The persistent gap between official reports and independent estimates eroded public confidence in state reporting.
This loss of data credibility has tangible economic impacts:
1. Distorted Wage Negotiations: Public sector wage increases, pension adjustments, and minimum wage hikes are tied to official TÜİK figures. When official inflation metrics understate real cost-of-living increases, household purchasing power declines.
2. Distorted Sovereign Risk: International credit agencies and global capital markets evaluate national risk profiles using verifiable economic data. Unreliable reporting increases the risk premium on Turkish sovereign debt, making foreign borrowing more expensive for both state institutions and private corporations.
3. Internal Market Mispricing: Without a trusted inflation baseline, domestic businesses struggle to accurately price goods, negotiate commercial contracts, or project long-term capital expenditure.
The challenges facing Turkey's economy extend beyond standard cyclical shifts; they reflect the institutional erosion caused by hyper-centralized control. Restoring economic stability requires structural governance reform: reinstating statutory autonomy for the Central Bank, returning to evidence-based policy frameworks, and ensuring complete independence for statistical agencies. Without these institutional safeguards, economic recovery remains vulnerable to political intervention.