'Everything is overheating': Why is Turkey's economy in such a mess?
Turkey’s economy is in tatters.
Runaway inflation and a collapsing lira are pushing millions of Turks to the brink of financial ruin and slamming factories, farmers and retailers across the country.
More than two-thirds of people in Turkey are struggling to pay for food and cover their rent, according to a survey by Yöneylem Social Research Centre, fuelling a surge in mental illness and debt.
But it wasn't always this way. The Turkish economy came on leaps and bounds over the last two decades, averaging 5.8% yearly GDP growth between 2002 and 2021.
So, what went wrong?
Ask anyone who goes to Turkey year on year and they will tell you that the Turkish lira is in trouble. Starting in 2013, the currency has steadily fallen in value, nosing diving over the last 12 months.
In September 2021, 1 US dollar was worth around 8 Turkish Lira, yet by October 2022 this has lept to nearly 19.
One of the main consequences of this devaluation is inflation - and lots of it.
When currencies fall in value, things brought from abroad become more expensive. With most countries importing goods, such as fuel, materials or technology, weaker currencies mean higher prices.
This has fuelled record-breaking inflation in Turkey -- among the highest rate in Europe.
The Turkish Statistical Institute reported that yearly inflation was at 83.45% in September, though many have claimed the real rate is likely even higher. Independent analyst ENAG estimated that the annual CPI inflation was in fact 176.0%.
Turkish businesses have been hammered by the lira’s fall in value, which has caused production costs to spike, while people’s wages have been depleted because they can now buy less with their money.
“The situation is even worse for skilled workers,” says Dr Cem
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