Turkey will be soon celebrating its 100 years in 2023 as a modern republic.
In the same year, elections will be held in Turkey. Just two years before the elections economy has gotten out of control from the hands of President Erdogan.
Since 2013 turkey’s GDP is consistently falling. Covid 19 affected Turkey’s economy severely. The GDP of turkey attained its peak in 2013 at 957 billion US dollars. in 2019 it fell to 761.4 billion dollars. Economists predicted that high inflation would be a major issue for Turkey’s economy.
Turkey’s annual consumer price inflation surged to 16% in March 2021. Inflation is the general rise in the price level over a period of time. Th is means the price of a good is increased by 16 percent. Turkey’s annual inflation rate is expected to rise to 17.3% in April. The inflation has risen for six straight months to well above a 5% official target. It has been in double digits for most of the past four years.
Economists believed that The reason for the high inflation rate in Turkey is because of the action of president Tayyip Erdogan. President Tayyip Erdogan has abruptly fired four bank chiefs in less than two years, hurting monetary credibility and contributing to the currency’s long-term decline, which in turn has driven up overall inflation via imports. Tayyip Erdogan sacked the central bank’s former hawkish governor, Naci Agbal, in a shock move that sent the lira down 12% in a week. The depreciation raises overall prices for import-dependent Turkey, and pushed producer price inflation above 31% in March.
Erdogan appointed Sahap Kavcioglu as the new central bank governor. Before taking the job, Kavcioglu had criticized the policy stance as harmful to Turkey and adopted the unorthodox view shared by Erdogan that high rates cause inflation. Many foreign investors dumped Turkish assets when he was appointed for fear of quick rate cuts. Erdogan has fired three central bank chiefs in two years, disintegrating monetary credibility.
Turkish Lira is losing its value against the dollar. Erdogan is leading Turkey since 2003 first as a prime minister then as president. From 2003 to 2013 Turkish lira was almost stable. At that time one dollar buys around 3 Turkish lira. since then Turkish lira’s value has considerably lost. In 2021 one dollar buys 8.2 Turkish lira. Experts believe that the reason for the devaluation of the Turkish lira is that Investors are losing faith in the authoritarian rule of Erdogan. Analysts expect rate cuts just after mid-year and say that premature easing could further compress real yields on lira deposits, hurting the currency more.
Summer tourism season is the main source of foreign currency revenue in turkey. If turkey somehow manages to promote tourism by easing coronavirus restrictions it would generate foreign currency revenue for turkey. unfortunately The government this month reimposed weekend lockdowns, limited restaurant services, and gatherings amid rising coronavirus infections.