Turkey’s currency crisis ended more quickly than many economists predicted, but households are still struggling to make ends meet.
Last week, during a speech in Ankara, President Recep Tayyip Erdogan said he was optimistic about Turkey’s financial position in the coming year.
“By reducing inflation rates to single digits and cutting interest rates, we have cleared the air in our country. 2020 will mark a year where interest rates are going to fall further,” the Turkish leader said.
The Turkish central bank has slashed interest rates by 10 percentage points in recent months to give impetus to the slow economy, but experts warn further moves could have a risky effect on the inflation rate.
However, the Turkish government’s optimism for a speedy economic recovery is not shared at the household level.
“In big cities, citizens are not happy with the state of the economy and the cost of living,” Can Selcuki, an economist and director of the Istanbul Economic Research, a consultancy, told Xinhua.
The reason why people are disgruntled is largely that high unemployment rate persists in Turkey, especially among the young population, despite government measures, Selcuki explained.
“The private sector isn’t creating new jobs and is making workers redundant. This is a problem,” said the economist.
The government expects the crisis-hit economy, which contracted in the last three quarters, to grow 0.5 percent this year. However, consumers are reluctant to spend money.
After the World Bank, the Organization for Economic Cooperation and Development also confirmed that recovery is underway, but insisted also that uncertainties remain high in Turkey, especially in the banking industry, burdened with distressed loans.
Two well-known Turkish firms, shoemaker Kemal Tanca and telecom company Telpa, received last month legal bankruptcy protection to prevent their creditors from calling in all their debts at once.
Turkish airline company AtlasJet last week started to suspend its operations for a month, citing a jump in costs due to route change to Istanbul’s new airport and economic difficulties as weakening Turkish lira discouraged air travel.
The Turkish economy shrank by 3 percent year on year in the last quarter of 2018, and 2.6 percent and 1.5 percent in the first and second quarters of this year respectively, showing signs of improvement after the first recession in a decade.
After being hit in August last year by a major currency crisis resulting from tension in ties with the United States, the economic crisis has made itself felt much stronger with unemployment rate standing at 14.2 percent in August.
The government expects the economy to grow by 5 percent in 2020, an ambitious target not easy to meet.
In a supermarket in Ankara’s middle class Yildizevler district, the mood of shoppers is bleak.
“Each month I notice that prices are going up of almost every item that I buy. This is really depressing. If it goes on like this, 2020 will be much worse than this year,” Ayla Erdogmus, a bank clerk, told Xinhua.
She pointed out many around were complaining on a daily basis about the effects of high inflation on essential goods, such as food, medicine, electricity and fuel while wages have stagnated in general in the past 18 months.
“Winter is coming. People will truly feel hardships. The prices of electricity and natural gas went up by more than 50 percent since last year, so I don’t feel that inflation is dropping,” Erdogmus argued.
The Turkish statistics institute announced that the inflation rate fell to 8.55 percent on a year basis last month, the lowest level in almost three years.