Turkish lira is suffering an obvious decline and instability in exchange rates, and the final results for this is the increase in the economic inflation rates in Turkey.
Definition of Economic Inflation::
Inflation is the continuous increase in the general price rates in the economy in a certain country through time, inflation also is described as the loss in purchase power through time, which means that the amount of money that you have is not able to purchase today what you would purchase yesterday like: goods prices, daily service like clothing, food, and public transportation.
What is the Economic Inflation Rate in Turkey in 2023?
Inflation in Turkey is one of the biggest crises that every Turkish citizen is suffering from, as the Turkish Statistical Authority has published the inflation rate monthly based during the last December has reached 6.65%, and the annual inflation rate has reached 57.68%, and the inflation rate annual based for January 2023 is less compared to rates were recorded in the past recent months.
What are the Reasons Behind The Economic Inflation in Turkey?
1. Increase in Interest Rate::
As the increase in interest rate will cause an increase in production costs and services, especially if the economy is largely dependent on bank credits.
2. Decline in Turkish currency value (Lira)::
The decline in purchase power of the local currency increases the inflation in terms of demand, we fear during the coming period, in light of the rise in oil prices, that the inflation rate will continue to increase for a long time, so we must pay attention to the state of concern among savers and holders of foreign currencies.
3. Increase of Global Energy Prices::
Turkey depends on importing its oil needs to a large extent, that made Turkey move toward encouraging energy generation from other power sources like (solar, wind, and thermal energy), it was announced that quantities of natural gas had been discovered in some Black Sea fields.
4.Ukrainian War::
The Russian war that started in February 2022 caused an increase in the general crises, and caused a large and direct effect on Turkey, and according to the Turkish economy expert, the Ukrainian war increased the inflation because the lack of demand the decrease in global trade and slow down of the economic activity.
5.Increase in American Interest Rate::
Which cause the increase in the US dollar rate which caused in crease in the real value to the Turkish imports.
What are the Effects of The Economic Inflation on Living in Turkey?
The Turkish citizen or the foreigner in Turkey has found himself without a warning in front of new prices, and started to feel a crazy increase in prices, and in the other hand a fixed or a slow increase in salaries, simultaneously with that, the threat of food security and the whole world's food basket was endangered in light of the recent developments. However, the Turkish government took a set of measures, including:
Increasing the minimum wage, decreasing taxes on basic goods, and making some discounts on public services.
What are the Effects of Inflation on Investing in Turkey?
Economic inflation has direct effects on Investment in TurkeyEconomic inflation has direct effects on investing in Turkey, and according to the European center specialized in investment researches in Europe, the rates of foreign investment in Turkey has increased to 27% during the last year, as Turkey ranked fifth in Europe in attracting foreign direct investment projects, and Turkey seeks to be a global center in industry and export especially that it enjoys a unique geographical location that connects three continents and is desirable for living for foreigners from all over the world.
