WORLD / MID-EAST
Turkey inflation slows in Nov
Official data shows it is the first time since May 2021
Published: Dec 05, 2022 11:37 PM Updated: Dec 05, 2022 11:32 PM
Turkish President Recep Tayyip Erdogan attends a meeting with Russian President on the sidelines of the Shanghai Cooperation Organisation (SCO) leaders' summit in Samarkand on September 16, 2022. Photo: AFP

Turkish President Recep Tayyip Erdogan attends a meeting with Russian President on the sidelines of the Shanghai Cooperation Organisation (SCO) leaders' summit in Samarkand on September 16, 2022. Photo: AFP


Turkey’s inflation slowed in November for the first time since May 2021, official data showed on Monday, delivering a boost to President Recep Tayyip Erdogan ahead of 2023’s election.

The rate slowed to 84.39 percent, according to state statistics agency TUIK, down from 85.51 percent in October.

Turkey’s inflation has risen steadily since reaching a low of 16.6 percent in May 2021. The emerging market’s troubled economy has turned into a major stumbling block on Erdogan’s path to a third decade in power in a presidential poll due by June 2023.

Erdogan’s approval rating began to suffer when he set off on an unusual economic experiment in 2021 that tried to bring down chronically high consumer prices by lowering borrowing costs.

Conventional economic theory embraced by almost every other big nation pursues the exact opposite approach.

Turkey’s lira began to drop in value almost immediately, as consumers rushed to buy up dollars and gold to try to protect their savings.

The price of imports such as oil and gas soared, creating an inflationary spiral that the nominally independent central bank fed further by continuing to lower interest rates.

Erdogan has maintained that his unwavering focus on economic growth at all costs will eventually pay off.

“We will witness the rapid descent of inflation soon and we will see together that the dirty scenarios built on this trouble are torn and thrown away,” he repeated over the weekend.

Erdogan has blamed inflation on outside factors such as the global spike in food and energy prices caused by the Russia-Ukraine conflict.
Erdogan’s much-criticized economic team hailed Monday’s announcement as vindication of their approach.

“As we have previously stated in various media, we have entered a downward trend in inflation, leaving the peak behind, unless there is an unexpected global development,” Finance Minister Nureddin Nebati tweeted.

Most economists believe that Turkey’s inflation rate will continue to slow but remain elevated for many months to come, unless Erdogan radically changes his approach.

An accompanying inflow of funding from the Kremlin and Turkey’s former rivals in the Middle East, which Erdogan secured through a major diplomatic reversal in 2022, will help the government prop up the lira, economists believe.

Erdogan’s strategy aims at “keeping the lira relatively strong this side of elections with foreign money,” Timothy Ash of BlueBay Asset Management said.

“But that will destroy competitiveness with massive real appreciation.”

AFP