Turkey's Inflation Hits New High: Will Erdogan Lose the 2023 Election?
this video was brought to you by tldr store and if you want your order to be personally delivered by the entire trdr team anywhere in the world, please watch until the end of the video to find out how on Thursday the official statistics authority of
turkey announced the Statistical Institute from
inflation rate had hit a 25-year
high of 85 percent in October and if that doesn't sound bad enough, unofficial estimates push the actual
inflation figure even
higher, but nonetheless This
Erdogan has made it clear that he plans to continue cutting rates that have already fallen 8.5 percent in the last 18 months, so in this video we're going to take another look at
Turkey's economic woes.
While most analysts expect things to get worse and how all this interacts with
elections scheduled for June next year ER foreign unorthodox economic policies in the past, so if you want to know more about the situation in general, you can go and see the main thing. However, what you need to know is that, in part, Because
Turkey's economy is
highly dependent on imports,
inflation rate has increased over the last year or so, now usually central banks raise rates to reduce
Erdogan he believes this idea is a conspiracy advanced by the so called interest rate lobby and instead prefers to cut rates which is exactly what he has done and to make this unorthodox economic policy happen
erdogan has basically fired anyone central banker who has tried to raise rates and as such the central bank has cut rates from March 19, 2021 to 10.5% today as predicted by ortho economists doxos, this has not slowed down
inflation and year on year
inflation has increased from 20 to 85.5 in the last 12 months and this is the
inflation rate seen in
Turkey since the entry into force of Erdoğan.
Power 20 years ago when by the way he came to power promising to bring
inflation down from crazy 90s
highs also worth saying if the official figures weren't the rather bad unofficial estimates suggest things are even worse than the Statistical Institute
Turkey is admitting that a separate index measuring
inflation in Istanbul compiled by the city's Chamber of Commerce put the true figure at 107 while another unofficial index developed by the independent
inflation research group did A group of academics and Former government officials put it even
higher at 185. However,
Erdogan is apparently undeterred and has made it clear that he plans to continue his rate cut last month.
He said that he wanted to reduce rates to single digits by the end. of the year and at a recent rally, he said that he continued to cut rates while he was in power as
inflation rate is currently at almost 100 percent and seems unlikely to come down any time soon. Being in chaos, however, evoking expectations,
Turkey's economy is holding up quite well, at least according to official statistics. stics in 2021
Turkey's GDP grew a beautiful 11% and this year it looks like it has reached over seven percent now this growth has been driven by a mix of consumption and exports for example in the second quarter the consumption rose 22.5 percent, while exports rose 16.5. percent and in a way this makes sense if
inflation is really
high but interest rates are low then there is no reason for people to hold on to cash they just want to double it as fast as they can which significantly increases the consumption similarly,
inflation has weakened the lira, which has made
Turkey's exports much more competitive for the context, a dollar now buys almost 19 liras against 10 liras last year and five liras in 2019 and As such, the depreciation of the bills has made Turkish products cheaper for international buyers, which has improved their export.
However, the market, although growth is strong, is not all good for the most part. Turkish wages have not kept pace with
inflation, which is bad news for
Turkey's labor market. Retirees and retirees have also been hit hard, in fact the main beneficiaries have been the banks in
Turkey, which saw their profits increase fivefold in the last year. Furthermore, most analysts expect
Turkey's growth to slow significantly in the coming months. JPMorgan forecasts 2 percent. contraction for the third quarter and zero growth for the fourth quarter now this is basically because as
inflation erodes wages and people quickly spend all their savings consumption dries up quickly as people suddenly realize that they have run out of money, so there
will obviously be a recession. it would be bad news for ordinary Turks, but it would also be quite scary for
Turkey's public finances, while
Turkey's debt-to-GDP ratio is quite low, around 35 percent, about half of those debts are denominated in foreign currency and about $180 billion in bonds are coming in. due only in the next 12 months and since the lira is worth very little right now, if a recession
hits, they may have a hard time paying it off.
These debts and that is, broadly speaking, the reason why the credit bureaus that basically measure the probability of a country defaulting on its debts have been downgrading
Turkey today. It means a default is still likely, but there's certainly a chance a recession could also be bad news for
Erdogan, who is running for re-
election in June
, while polls suggest his AKP party is still on track to be the biggest party or just beer by a slim margin, they are likely to
lose their parliamentary majority and their Coalition partner, the Nationalist Movement party, polls less than 10 percent and could easily fall for below the seven percent electoral threshold.
Similarly, polls for the presidential
election suggest that the most popular opposition candidates are now neck-and-neck with
erdogan and a couple of recent polls have given Kamal Khali chidogo a tentative lead over erd oganogo is the leader of the main party
Turkey's opposition party, the Republican People's Party, which leads a six-party opposition Alliance with a shared platform Focus only on abolishing the presidential system of government in
Turkey that gave word one executive powers in 2018. Polls were
already they are neck and neck so if
erdogan oversees a recession in the coming months we can expect the opposition to push on although this may sound like good news to anyone who has had enough of
erdogan he is unlikely to go down without a fight and that's because
will likely try to divert public attention from
Turkey's failing economy and h He is moving towards foreign policy, a subject with which
Erdogan is much more comfortable and, worryingly, he could do so by provoking conflict with the Kurds in the east or Greece in the west. and at the end of the day there is no guarantee that you would even accept a peaceful transfer of power in general, then the stage looks set for a dramatic contest in
, especially if
Turkey's economic chaos continues and if all of that is too much for you.
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