Turkey has a serious problem




They have no Turkish doubts: inflation has reached its highest value in 15 years. Prices grow, government measures are more than ineffective, and experts are concerned:

it will be even worse.

Inflation is not a new issue for Turkey. In the nineties it was almost 90%. They talked about the "inflatable monster". The robust program of saving from the economic crisis in 2001, the assistance of the IMF and the political stability that came with the administration of the conservative Justice and Development Party (AKP) led to a fall in inflation. 16 years in which the AKP stands in power, old problems returned: unstable economy and high inflation.

Türkei Lira Banknoten (Reuters / Sezer)

According to the Turkish statistical office, inflation in October reached the highest level in the last 15 years – 25.2%. Clothes and footwear (12.7%) have the highest price. Real estate prices increased by 4.1%, furniture by 3.4%, food and non-alcoholic beverages by 3.2%. So Turkey is among the ten best countries with the highest inflation of a total of 180 countries for which the IMF discovers data.

Finance Minister Berat Albuyrak recently announced that the inflation rate will fall in November and December. However, economists find it unlikely.

"Inflation will continue to grow"

Professor of Engineering Economics Yoner Gunchvad from the Istanbul Technical University is convinced that the roots of a major Turkish problem are currently in the real economy: "Companies can not determine the prices of their own products themselves, these prices no longer reflect the actual costs of their production, which is, however, compulsory. As prices continue to rise, inflation will also rise, "he said, criticizing government measures adopted in September.

The package of measures predicted the freezing of electricity and gas prices, a 10% reduction in products produced by companies and included in the government program, and 10% interest rebates on large bank credits. Authorities also carried out regular checks at supermarkets in order to determine whether measures were taken.

Ineffective measures

Economist Ugur Gursez criticizes government measures: "Apparently, they were expecting a drop in prices, in fact, it was clear from the very beginning that if the price cut would be a symbolic one, inflation seems to continue to grow at a rapid pace," he said.

Raising prices is also a result of the weak Turkish lira. The Turkish currency is a serious devaluation of the strike with the United States for the arrest of US Pastor Andrew Brunson. The weakness of gold has increasingly collected imports and increased prices for all consumer goods. Following the announcement by Brunson of Turkey last month, the US government abolished some of the sanctions against the country. Despite the resilience of President Erdogan, Turkey's central bank raised its benchmark interest rate in September to 24 percent. These two movements have led to a slight mitigation of the situation.

Economists like Gurgaon, however, point to the fact that this is a temporary effect that will not have a major impact on inflation: "The price of commodity prices seems slow but there is a significant increase in energy prices – almost 80% on an annual basis. at retail prices, "warns Gursez.

The economist believes that government measures to reduce inflation are not effective because they are trying to only influence the symptoms of the crisis but not cure the causes. "Clearly, nothing would have been achieved," says economist.



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