Inflation in Tukey is running rampant and making life difficult for the ordinary citizens.
The main cause of the inflation is that the Central Bank of the country hasn’t been allowed to play its role and take measures to bring inflation back to its target of 5%.
The most obvious solution to this problem is the raising of the interest rate.
But President Erdogan, who has stated that he believes in keeping interest rates low, hasn’t allowed the Central bank to do that.
In the absence of such action, the interest rate is as high as 16%.
1. Reaction Of The General Public
Surprisingly, the reaction of the masses of Turkey to the current economic crisis hasn’t been as drastic as expected. There is still no panic and the markets are still full of goods.
The reason for this lack of unrest may well be the fact that Turkey has witnessed very high economic growth and that has improved people’s income, so they are not feeling the pinch of rising prices.
Another reason why the general public may be keeping quiet is their faith in the good intentions of the President Recep Tayyip Erdogan.
They may be inclined to believe that his policies, though causing short-term pain, are intended for greater good of the country and economy.
Indeed, Turkey has witnessed development of major infrastructural projects in recent past that are a direct result of the heavy economic growth in recent times. These projects, while their value to the society may be debated, are highly useful as symbols of prosperity.
Last but not the least, the low rates of interest may be helping people. While they may be forced to pay more for daily items, paying less on their loans might be some sort of offset for them.
2. Impact On Businesses
In the normal circumstances, businesses are likely to suffer because of high inflation but as stated above, there is no panic and hence, the situation isn’t as bad as would be expected in such a situation.
There is one industry that is doing pretty well due to the fall in the value of lira and that is tourism. Because the other currencies have strengthened, a large number of people from other countries, especially Arab countries, are making their way to Turkey.
The boost in tourism is obviously helping several other sectors like shopkeepers in areas frequented by the travelers.
Without the help of tourism, many more people would have suffered the consequences of high inflation.
3. Nationalist Sentiment
Turkey is undergoing a huge churn, socially and politically.
The President Recep Tayyip Erdogan has consolidated his power and has undertaken a huge purge of people suspected to be involved in the coup attempt in 2016.
The support and sympathy that has been aroused among the Turkish people for their President is also preventing them from getting angry at him.
With American tariffs being imposed as well, the idea of him as a strong leader who wants to improve Turkey’s standing has become even more solid.