Turkey faces runaway inflation

Turkey is sinking into the economic crisis, inflation reached 70% over one year in April.

In Turkey, the April inflation rate was released on Thursday May 4 and it is almost unbelievable: +70% over one year. The biggest increase since 2002 and that may be far from the truth. The opposition to President Erdogan and independent Turkish economists believe that the official figures are underestimated and that Turkey would rather be on an inflation rate of… 156%.

However, this phenomenon is not new. In Turkey, the inflationary spiral has been going on for years. Since 2017, inflation has never been below 10%. Several things can explain this situation. The first is the stubbornness of the all-powerful President Erdogan to do what he wants. When inflation is high, to curb it, key rates must be increased. But, for years, the Turkish president has been doing the opposite. It even put pressure on its central bank to lower key rates and thus hoped to boost growth.

A bad idea, because the consequence is that the Turkish currency collapses. A few years ago, one euro was exchanged for five pounds, today it is more like 16. Then, what complicates the situation, as everywhere in the world, is the war in Ukraine. Turkey is very dependent on Ukrainian wheat and Russian energies so mechanically, there too, prices are rising. It is especially on food: +89% and on transport +106% that the note is the heaviest, according to our correspondent on site.

The Turkish population cannot see the end of this lasting economic crisis. It is especially young people who suffer. Students pass diplomas that are no longer worth anything. A doctor in Turkey earns 600 euros per month, barely double the minimum wage. Last year, according to figures collected in this survey by the daily Les Echos, 1,400 young doctors left to work abroad, six times more than five years ago. According to a survey by the Metropoll Institute, 64% of young people aged 18 to 34 want to live abroad. Their favorite destinations: Germany, the United Kingdom and the United States.

This brain drain does not seem to worry President Erdogan. During a speech last March, he addressed young doctors: “Practicing this beautiful profession for money is not ethical. If they want to leave, let them go”. Still, Erdogan should be careful. The problem of inflation does not only affect the dreams of young people but the whole population. He had made Turkey’s prosperity a promise of his years of unchallenged rule. In the 2023 elections, the place of “Sultan” is threatened.

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