Europe

Turkey’s price hike hurts families and tarnishes Erdogan

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ISTANBUL — As Turkey’s annual inflation rate has soared above 80%, families are being forced to stick to worn-out clothes and shoes and cut meat from their diets while some have struggling to pay for school meals for their children.

The unorthodox financial policies of President Recep Tayyip Erdogan, who has insisted on lowering interest rates in defiance of a broad economic consensus that inflation is better controlled by raising them, are exacerbating the country’s worst inflation crisis. for more than two decades, according to economists.

The belt-tightening is so severe that it has embittered many voters against Mr Erdogan, Turkey’s top politician for nearly two decades, leaving him politically vulnerable as he prepares to re-election. next year.

“Living conditions are difficult, paying rent is difficult, paying at the market is difficult – everything is difficult,” said Ese Gucer, a resident of the southern city of Adana who has long voted for Mr Erdogan and his party. . “My faith in Erdogan has been shaken because of the economy,” added Ms Gucer, 32. “He lost me.”

Year-on-year inflation was 84.4 percent in November, according to data released Monday by the Turkish Statistical Institute. That was down slightly from 85.5% in October, the highest rate in 24 years. Some economic observers say the real rate for many of Turkey’s estimated 85 million people is much higher.

The lower rate is unlikely to bring immediate relief to most people, but the government has said it represents a turning point.

“We have entered a downward trend in inflation, leaving behind the peak, unless there is an unexpected global development,” Turkish Finance Minister Nureddin Nebati wrote. on Twitter.

The blow of rising prices hit the poor and middle class particularly hard.

More than half of Turkish workers earn around the minimum wage, which is worth less than $300 a month due to the steep devaluation of the Turkish lira against the dollar. As the lira fell, people saw their wages lose purchasing power and the value of their savings evaporate.

“There’s no way to earn a decent rate of return on what you’ve saved in this country, so there’s this massive destruction of wealth,” said Atilla Yesilada, analyst at GlobalSource Partners. “I’m sure there are winners in this, but most of society are seeing their savings dwindle day by day.”

Turkey’s crisis has been going on for years as political unrest and what critics call Mr Erdogan’s slide into authoritarianism have made the country less attractive to many investors. Turkey has a substantial trade deficit and large external debt, and the government has been drawing on its foreign exchange reserves in an attempt to slow the currency’s collapse.

The coronavirus pandemic has deeply reduced tourism revenues and global market dislocations exacerbated by Russia’s war in Ukraine have made inflation a threat to economies around the world.

But while other countries have raised interest rates to control prices, Mr. Erdogan has repeatedly cut them.

Last month, the International Monetary Fund recommended that Turkey raise the interest rate to counter inflation and grant more independence to its central bank, which is widely seen as doing Erdogan’s bidding. But in late November, the central bank cut rates again, to 9%, the most recent in a series of cuts that brought the rate down from 14% in August.

In a series of interviews, Turks mourned once-normal items that rising prices have turned into luxuries or cut out of their budgets altogether: chicken, weekend outings with their kids, deodorant.

“Every day the money is melting away,” said Mehmet Kaya, a car mechanic in Adana.

The price of motor oil has quadrupled since the crisis began in 2018, he said, and prices have also risen for everything he needs for his store. At home, the amount of money needed last year to fill the trunk of his car with groceries only bought two bags.

“I’m very depressed, pensive, stressed,” said Mr Kaya, 40.

In speeches and interviews, Erdogan has described low interest rates as part of a plan to spur economic growth by boosting manufacturing and making Turkish products more attractive for export. He blamed the country’s economic woes on unspecified foreign forces while suggesting that Turkish families are actually better off than people in wealthier countries.

Mr Erdogan tried to play down inflation, saying it was not a crippling economic threat and promising the government would take action against exorbitant price hikes.

“We expect a little more patience and strength from our citizens,” he said in a televised statement last month.

But in the United States, inflation has fallen to less than 8% per year, after the rise in interest rates, while annual inflation in Turkey is more than 10 times higher than this rate.

To soften the blow, Mr Erdogan’s government has raised the minimum wage twice since January, funded accounts to protect local currency savings from devaluation, launched a multi-billion dollar housing subsidy program and supported other projects to help the poor. The economy continued to grow, increasing by 11% in 2021, suggesting a post-pandemic recovery; economists expect more modest growth of around 5% this year.

But soaring prices for many Turkish families threaten to tarnish the legacy of Mr Erdogan, who has been praised for much of his two decades in power for overseeing vast economic growth that has shifted millions of Turks from poverty to more comfortable middle-class lifestyles.

Many of those people are now seeing those gains disappear, which has damaged Mr Erdogan’s political standing to such an extent that a number of polls now suggest he could lose next year’s election.

A recent poll by Mehmet Ali Kulat, who consulted both Mr Erdogan’s ruling party and opposition members, found that 36% of those polled said they would vote for Mr Erdogan and 44% would vote against him, regardless of his identity. competitor was. Fourteen percent said they would decide based on who their challenger is, and 6% were undecided.

In another recent poll by PanoramaTR, a risk analysis organization, around half of those polled said they would not vote for Erdogan and less than 35% said they would. The group also found that two potential challengers performed significantly better than Mr Erdogan.

“It’s mainly the economy,” said Osman Sert, the group’s research director and a former media adviser to Mr Erdogan’s government. “If there was no economic crisis, I don’t think Erdogan would lose the election. The economy makes all the other problems visible.

Some analysts warn that a lot could change between now and the presidential and parliamentary elections to be held next June or before.

A new coalition of opposition parties challenging Mr Erdogan has yet to choose a candidate and may struggle to hold together. Mr. Erdogan has a long history as a shrewd political survivor and now sits atop a system that gives him enormous power to take actions that could help him win votes.

He can also rely on a vast party infrastructure and a core of loyal voters who will stick with him no matter the economy.

Melike, who cleans stairs to support her family in Istanbul, acknowledged times were tough, pointing to a large crack in her worn-out shoes which she said she could not afford to replace.

“I don’t buy anything for myself unless I have to,” said Melike, 33, declining to give his last name. “I buy for children first.”

But she did not blame Mr Erdogan, saying many countries were suffering from inflation and unnamed “external powers” ​​were making Turkey’s problems worse.

“It’s not about the leaders of this country,” she said.

Also in Istanbul, three women in their twenties had spent the afternoon looking for an affordable watch for one of them, to no avail. All three worked to support their families and struggled to get by, they said.

“My salary is gone in two days and then I live on the credit card,” said Bahar Ecevit, 24, a clerk at a clothing store. Prices had gotten so high relative to her salary that she couldn’t afford a new winter coat, she said.

Like many young Turks, she hoped to go abroad and find a more secure future.

“We only live for the moment,” she said. “We don’t know what we will do tomorrow.

Safak Timour contributed reporting from Istanbul and Nimet Kirac from Adana, Turkey.



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