‘Post-election crisis’

The government is accelerating its steps to increase the purchasing power of the people to offset the economic destruction it has created until the elections. President Recep Tayyip Erdoğan announced last week that the presidential elections, which should be held in June under normal conditions, could be brought forward “a little”. According to economists, it is desired that the elections be delayed due to the effect of the decrease in inflation due to the base effect and the relief of currencies that are expected to come from countries such as Qatar and the United Arab Emirates in the markets.

Altınbaş University Faculty of Business Administration Faculty member Prof. Dr. Hayri Kozanoğlu stated that the economic administration will make some moves to speed up economic activity until the elections; He said the trend of keeping demand alive and pleasing the electorate, even for a short time, will continue. Stating that daily decisions will be made in the economy until the election and further maneuvers will be made according to the poll results, Kozanoğlu said: “Whatever the outcome of the election, entrenched problems in the economy, high inflation, poverty, chronic unemployment and deep mistrust in the institutional structures of the economy will await the new administration”.

CURRENCY CONTROL IS DIFFICULT

Kozanoğlu said: “A budget deficit of TL 460 billion was forecast for 2022 and TL 660 billion for 2023. It is understood that such a deficit did not occur in 2022 and that additional leeway was given for 2023. The loans for low-interest housing, the KGF package of TL 200 billion are all election-oriented activities,” he said.

Noting that such measures to revive the economy, however, also have the potential to revive the current account deficit and complicate exchange rate control, Kozanoğlu also stated that the dissolution of $21 billion in foreign currency deposits in the last 2 months has made the work of economic management a little easier.

Inflation is falling, prices are not falling

Noting that declining annual inflation does not mean declining prices, Hayri Kozanoğlu pointed out that, on the contrary, global price averages continue to rise well above Turkey’s averages of previous years. Kozanoğlu said: “The purchasing power of our citizens, whose income does not show an increase in parallel with inflation, naturally decreases, and their standard of living continues to decline.”

The minimum wage is twice the world average.

Prof. Dr. Hayri Kozanoğlu pointed out that the salaries of the vast majority of retirees are below the minimum wage. Kozanoğlu noted that while 19 percent of workers in the world receive the minimum wage, it is 5 percent in Germany, 8 percent in France and 37 percent in Turkey, which is almost double the world average. .

The expense is advanced

Prof. Dr. Hayri Kozanoğlu attributed the decline in inflation to 64.27 percent to the base effect, which occurred after inflation of 13.6 percent was removed in December 2021. According to Kozanoğlu, annual inflation may decrease by 55 percent first and to 40-45 percent in April, with inflation ending at 10.1 percent in January 2022. Kozanoğlu claimed that he made people increase their spending out of instinct to hedge against inflation and raise prices a little more.