People disembark from a boat after crossing the Bosporus Strait, separating Europe and Asia, background, in Istanbul, Monday, June 25, 2018. (AP Photo/Emrah Gurel)
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Recep Tayyip Erdogan was returned to office with sweeping new powers, after running the economy hot for more than a year.Most economists agree that Erdogan's policies caused the rout.The central bank has made domestic credit costlier too, by raising interest rates 500 basis points since April – a move green-lighted by Erdogan, after initial resistance, in a desperate bid to shore up the currency.An early sign of how Erdogan plans to tackle them could come in the next couple of weeks with the appointment of a new economic team.Simsek and Finance Minister Naci Agbal had signaled that fiscal tightening would come after last weekend's vote.Erdogan may not be inclined to the kind of fix that his technocrats were flagging, according to Nomura's Demir.In a Bloomberg interview weeks before the vote, Erdogan had vowed to take more direct control over interest-rate decisions – a prospect that alarmed many investors and accelerated declines on Turkish markets.Erdogan campaigned hard on Turkey's long-run economic performance on his watch, pointing to rising welfare standards as output grew at an average pace close to 6 percent a year.
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