The collapse in the Turkish lira is accelerating this morning, with the USDTRY rising above 5.80 for the first time since last October and CDS pushing to September highs, as the Turkish economy continues to slide ever deeper into recession, with the country on Monday reporting that a whopping 366,000 people became unemployed in the last month, sending the country's jobless rate to the highest level in a decade.

With Ankara trapped, unwilling to let the lira devalue on fears of capital outflows even as inflation surges while the economy is urgently in need of a weaker currency, unemployment rose far more than forecast, rising to 14.7% in January - the highest since 2009...

... from 13.5% a month earlier, according to Turkstat data; the number of people without jobs has reached 4.7 million people, with youth unemployment jumping to 26.7%, the highest on record.

As Bloomberg summarizes "the severity of the job losses despite a last-ditch spending blitz by the government underscores the economic challenges facing Turkey after it entered its first recession in a decade following a currency rout last year that touched off inflation."

The most recent dismal economic data comes at a time when Erdogan's undisputed control over Turkey appears to be slipping following the recent local elections, where many of the municipalities won by the opposition from the ruling party were those where unemployment is running in double digits, official data show. As such, the political headache for the "executive president" is only set to grow as the country finds itself deeper and deeper in what is rapidly developing as a full-blown economic depression.

Meanwhile, investors were also concerned by ongoing speculation that the ruling AKP will challenge the Istanbul election outcome which saw Turkey's most important city flip control to the opposition, after Erdogan’s candidate lost the mayoral race in Turkey’s largest city to Ekrem Imamoglu, a blow for Islamists who had controlled Istanbul since 1994. “We are going to ask for fresh elections in Istanbul by using our right to make an extraordinary objection,” said Ali Ihsan Yavuz, a deputy head of the AKP.

Erdogan’s refusal to concede defeat in Turkey’s commercial hub has been condemned by political opponents as an attack on Turkey’s democratic foundations. Among the vocal critics of the AKP’s reaction to losses at the ballot box was Mustafa Sonmez, an economist known for opposing the government’s policies. Sonmez was detained on Sunday and later released after being questioned largely over his tweets over his tweets following the vote, according to his lawyer, Husniye Aydin. In his latest posts on Twitter, Sonmez criticized authorities for not recognizing the opposition’s candidate as the winner of Istanbul’s mayoral race.

Making matters worse for Lira bulls, there is little hope for any near-term turnaround: “The rise in unemployment will continue - albeit at a slowing pace,” said Muammer Komurcuoglu, an Istanbul-based economist at IS Investment. “A sharp monthly deterioration in job creation continues to take place across all the sub-sectors. We are seeing very clearly the impact of the economic slowdown on unemployment.”

But beside the collapsing Turkish economy, which was to be largely expected following last summer's financial crisis, what has mostly spooked investors is that even as Turkey rolled out a recapitalization plan for state banks, the program unveiled by Treasury & Finance Minister Berat Albayrak last week has underwhelmed investors.

In fact, as Axios reports, Turkish Finance Minister Berat Albayrak - Erdogan's son-in-law who replaced 2 highly respected ministers, despite having virtually no qualifications - held a closed-door meeting with hundreds of investors during the IMF-World Bank meetings in Washington last week, "and some who attended called it the worst they've ever had with a high-ranking government official."

"It was an absolute shit show," one emerging market fund manager who attended the meeting told Axios. "I've literally never seen someone from an administration that unprepared," another investor said.

And, as Axios correctly notes, the disastrous meetings "could not have come at a worse time for Turkey. Investors are growing more anxious as the country heads toward recession and President Recep Tayyip Erdogan is seeing his popularity erode."

Incidentally, what this means is that starting tomorrow, Axios will most likely be banned in Turkey.

Meanwhile, as Turkey faces growing headwinds both domestically, as the economy slides deeper into recession, and internationally where critical foreign capital is increasingly diverting to other emerging markets, locals are accelerating their shifting toward conducting business in hard currencies such as dollars and euros, and away from the Turkish lira.

As Michael Cornelius, an EM portfolio manager at T. Rowe Price, told Axios his biggest takeaway from the week's events was that he became more pessimistic about chances for a turnaround in Turkey.

"Not only are the fundamentals not improving, Erdogan is doing worse, investor sentiment is very, very bearish and they still have significant refinancing needs... This could be a systemic issue for emerging markets."

The silver lining: as investors once again shun Turkey, its currency still remains solidly higher than the lows it plumbed last August. The not so silver lining: this will likely not be the case for long, with the lira sliding to 6 months lows as Turkish CDS continue to blow out ever wider...