Buying a sweater, meeting a friend, or drinking a coffee outside has become more difficult for Turkish Özge Yılmaz.
– CONCERNED: Özge Yılmaz is worried about the future. Photo: Private
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The reason is that the Turkish lira has fallen to record lows, and this has led to sharp price increases in the country.
– Ordinary things like holidays have become a distant dream, says the 34-year-old woman who lives in the Turkish capital Ankara.
Strong inflation
Inflation in Turkey was 36.1 percent in December, the highest level in 19 years, Turkish statistical authorities said on Monday.
In November, the corresponding figure was 21.3 per cent. The price increase affects many in the country. Food prices have risen 44 percent in the past year, and people have started waiting in line to buy cheap bread.
Yılmaz fears new price increases.
“Everything has changed in the country and I am worried about my future,” says Yılmaz.
Foreign buyers flock
At the same time, something unique is happening in the border town of Edirne. Every day, thousands of Bulgarians and Greeks flock to the small town to shop for everything from face masks to wedding dresses.
– EDIRNE: The Turkish city has become a popular shopping destination due to its weak lyre. Photo: Emrah Gurel / AP
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For them, Turkey has become attractive due to the weak lyre.
– 80 percent of the customers in the city are now Bulgarians and Greeks, says Sezgin Öztürk who works in a furniture store in Edirne.
Foreign buyers travel to the city and return with full luggage. This makes the store owners in Edirne very happy, according to Öztürk.
– While a Turk can not afford to buy, for example, detergent, a Bulgarian comes and buys four of them at once, he says to TV 2.
– SHOWS SHOPS: The new everyday life has made Sezgin Öztürk a youtuber. Photo: Private.
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It also made Öztürk a «youtuber». A few years ago, he created a group on Facebook for his family in Bulgaria. The goal was to show the shops in Edirne.
Following the sharp economic downturn, Öztürk’s group has become very popular among Bulgarians.
Facebook groups where he posts videos, now has 121,000 followers. Last month, the number of followers was only 75,000.
– In a country with six million inhabitants, this number is very high, says Öztürk.
Erdogan’s war on interest rates
Liren lost 44 percent of its value against the dollar this year. The reason for the significant fall is President Recep Tayyip Erdogan’s very unusual economic model.
He says that high interest rates cause inflation and that they must therefore be low. But the central bank and experts believe that interest rates must be high.
Erdogan claims high interest rates lead to high inflation – the opposite of what is normally the reality. On November 22, Erdogan described the situation as a “war of economic independence” against interest rates.
“Interest rates are an evil that makes the rich richer and the poor even poorer,” President Erdogan said several times.
– Contrary to economic theory
Then the lira fell to record lows. Now a dollar costs about 13 Turkish lira. Five years ago, a dollar cost about three Turkish lira.
As a consequence, the general price level has increased, and the lira has lost purchasing power.
– RECORD LOW: The lyre has dropped to record low levels. Photo: Cagla Gurdogan / Reuters
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– This is a model that involves a great deal of risk. The president’s new policy has hardly been tried before. This is also contrary to economic theory, says Selva Demiralp.
Demiralp is a professor and lecturer in economics at Koc University in Istanbul. According to her, Erdogan’s desire to keep interest rates low is understandable, but it is not wise if you have high inflation in the country.
For several months after Erdogan’s announcement of low interest rates, the central bank disagreed with the president’s decision. Central bank governors who did not want to keep interest rates low were fired.
– Selva Demiralp is a professor and lecturer in economics at Koc University in Istanbul. Photo: Private
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In November, Turkey’s central bank cut the key interest rate, despite rising inflation in the country.
– According to the law, the central bank must be independent. But in recent years we have seen increasing pressure. Now the fourth central bank governor is in place and it looks like the new governor now agrees with the president’s theory, Demiralp says.
Finally, the professor says that the government will follow the traditional economic model. Otherwise, it is impossible to solve the currency crisis without high interest rates, according to her.
– This will happen, but the most important question is how much damage Turkey will get if we continue to follow the president’s new policy, she adds.
The journalist behind the article, Aysun Yazıcı, is a journalist from Turkey who lives in exile in Norway. She is affiliated with TV 2’s foreign department.
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