Amid the steady depreciation of the Turkish currency, lira –the worst performing currency in 2021, prices have been galloping. After the consumer price inflation surged to 36.08 per cent year-on-year, the highest since 2002, indications are that prices would further go northward. Many people have been pushed to poverty.
"They have no resources to buy essential items including food. The situation is grim and one can see people queuing up desperately to buy bread," a person dealing with the business community said.
In November the figure was 21.31 per cent.
Data portal Trading Economics pointed out that the main upward pressure came from food and non-alcoholic beverages followed by transportation and housing.
Unemployment rate among the youth has touched 25 per cent, the New York Times said. “The president’s popularity is sinking and his opponents have become emboldened,” the report said adding that angry outbursts have erupted on the streets.
While Turkey’s economy started facing tailwinds even before the outbreak of the Covid 19 pandemic, its “authoritarian” President Recep Tayyip Erdogan and his absurd policies have led to a crisis amid the spread of the virus. Erdogan has been vociferous about maintaining low interest rates adhering to the Islamic banking principles.
Thanks to Erdogan, independence of Turkey’s Central Bank has eroded. Central bank governors and other top officials have been replaced in quick succession.
On November 7, Naci Agbal was appointed governor of the Central Bank. He served only till March 20, 2021. Agbal’s tenure was cut short abruptly after he hiked interest rates to tame rising prices. Erdogan then appointed Sahap Kavcioglu who had been vocal about tight monetary policy. Prior to Agbal, Murat Uysal served as the governor only for one and half years—between July 2019 and November 2020.
However, an adamant Erdogan has repeatedly said that his economic policies will bear fruit.
“We know what we are doing. We know how to do it. We know where we are going. We know what we will achieve,” he said last year.
