Priceless: In Turkey, high consumer costs put millions of people under financial pressure. Experts are now warning of an economic collapse. This could also affect the next elections in June 2023 and President Erdogan’s chances.
According to official figures, inflation in Turkey is now 69.97 percent and has thus tripled in the last six months. The independent Inflation Research Group even sees it at over 156 percent – a value that anyone can confirm given their weekly shopping.
There is no end in sight to the rise in prices, and it is hitting the population hard, well into the middle classes. Basic groceries are suddenly three times more expensive than just a few months ago, coffee, meat or vegetables are becoming luxuries that many families are already doing without. The prices on the restaurant menus have been pasted over several times in recent weeks. People refrain from buying drinking water and drink the heavily chlorinated Istanbul tap water. Family visits for the holidays at the end of Ramadan were not possible for many this year.
In addition to the prices for food, clothing, petrol and energy, rents are also exploding. Many people complain that they are given notice and then the apartment is offered again for double the price. In view of the general market situation, they often have no choice but to accept this offer. Buying an apartment or a car – actually a common milestone for young families in Turkey – is a long way off. Even getting to work becomes a problem given the cost of petrol or public transport. Personal loans, on the other hand, are booming.
Beate Apelt is project manager for Turkey at the Friedrich Naumann Foundation for Freedom in Istanbul.
The mood in the country is tense and pessimistic, because the country has rarely experienced such a price increase. It comes at a time when many people are already looking to the next elections, which are scheduled to take place in June 2023. The political landscape is already visible in the election campaign mode, various exchanges of blows – often carried out on social media – determine the agenda.
An alliance of six opposition parties is negotiating a joint approach to end the Erdogan era and bring Turkey back into a parliamentary system. Given the very different electorate of the opposition parties, this will not be an easy task.
What is clear, however, is that the economic situation and its specific effects on people’s living conditions will play a key role in the election campaign. The president, with his treasury still well stocked, has an advantage here, because he can certainly alleviate one or the other need with election gifts and sell this as a successful policy.
Most people understand that the cause of the misery is not just external factors such as the Russian war against Ukraine and the resulting high oil prices. Although these play an aggravating role, the crisis began in autumn 2021 with Recep Tayyip Erdogan’s unorthodox financial policy.
Contrary to all financial policy knowledge and experience, the president had the central bank’s interest rates reduced in several steps from 19 to 14 percent, triggering a rapid fall in the Turkish lira. Erdogan insisted that the rate cut will curb inflation, but unsurprisingly the exact opposite happened.
Ministers of the ruling AKP are now calling on the population to be patient and trust them and assure them that the problem will be brought under control. However, there are no signs of serious measures to combat inflation.
Experts also expect that the lack of purchasing power will soon have an impact on the corporate sector and will put small and medium-sized companies in particular into difficulties. A collapse of the economy in the coming months can no longer be ruled out. In a pre-election period when everything is at stake for deeply polarized Turkey, this is a worrying prospect.
