Turkey’s Economic Descent: A Nation at the Crossroads of Heritage and Geopolitics

From Ottoman Grandeur to Economic Challenges

Turkey, a nation where East meets West, has long been celebrated for its rich history, vibrant culture, and strategic geopolitical position. However, recent years have seen the country grappling with significant economic challenges, marked by soaring inflation, a depreciating currency, and strained international relations.

Economic Policies and the Lira’s Decline

Under President Recep Tayyip Erdoğan‘s leadership, Turkey has adopted unconventional economic strategies, notably the belief that high interest rates fuel inflation. This approach led to significant rate cuts even as inflation soared, causing the Turkish lira to depreciate sharply. In March 2025, the arrest of Istanbul Mayor Ekrem İmamoğlu, a prominent opposition figure, further destabilized the economy, leading to a 12.7% drop in the lira’s value and a substantial outflow of foreign investments.

Geopolitical Alignments and Domestic Repercussions

Turkey’s foreign policy choices have also stirred controversy. Its overt support for Pakistan during the recent Operation Sindoor, including supplying drones and military equipment, has strained relations with India. This alignment has led to economic repercussions, with Indian industries boycotting Turkish products and a significant decline in tourism from India.

India’s Strategic Response: Economic and Diplomatic Measures

In response to Turkey’s support for Pakistan, India has undertaken several measures:

• Tourism Boycott: Indian travelers have significantly reduced visits to Turkey, with major travel agencies reporting a 60% drop in bookings and a 250% increase in cancellations.

• Trade Restrictions: Indian traders have halted imports of Turkish goods, notably marble and fruits, impacting trade worth approximately Rs 3,000 crore.

• Cultural and Media Actions: The Indian film industry has been urged to avoid Turkey as a shooting destination, and Turkish state media accounts have faced restrictions in India.

• Diplomatic Realignments: India is strengthening ties with Turkey’s regional rivals, such as Greece, Armenia, and Cyprus, to counterbalance Turkey’s influence.

IndiGo and Turkish Airlines: Under Scrutiny

IndiGo, India’s largest airline, has faced mounting pressure to reconsider its codeshare agreement with Turkish Airlines. This partnership, established in 2018, allows seamless connectivity to over 30 destinations across Europe and the United States via Istanbul. However, public sentiment has turned against this collaboration, with calls for its termination gaining momentum. IndiGo has not yet made a formal announcement regarding the future of this partnership.

Navigating the Path Forward

Turkey’s current predicament is a confluence of internal economic policies and external geopolitical decisions. Balancing its rich heritage with the demands of modern governance requires introspection and strategic recalibration. Restoring economic stability and fostering international trust are paramount. As Turkey reflects on its legacy, the path it chooses will determine whether it can harmonize its illustrious past with a prosperous future.

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