Inflation remains at 40 percent, normalization extends over 2 years

Turkey Although we head into the elections with a heavy economic outlook, a smooth transition in the economy is not expected, whether the government changes after the elections or not. Noting that the cost of the policies implemented by 2023 will be seen growing, the economists noted that inflation has solidified at 30-40 percent and stated that Turkey’s normalization process may take two years. Speaking at the “Turkish Economy in 2023” meeting organized by Koç-TÜSİAD University Economic Research Forum, TÜSİAD Chief Economist Gizem Öztok Altınsaç stated that inflation cannot be controlled, saying: “Inflation in Turkey will remain stuck at around 40 percent. Even if there is a change in power, we are likely to see very serious price fluctuations on the road to normalization, as the price of any TL asset does not reflect the truth. I do not expect a smooth transition and easy normalization at least once a year, ”he said. Bilkent University faculty member Prof. Dr. Hakan Kara, on the other hand, pointed out that there is no other country in the world like Turkey that loses interest rates and destroys asset prices.

THE PRICE WILL BE PAID

Noting that it seems very difficult for Turkey to grow more than 3 percent this year, Kara said: “Since we are growing with only one engine, there will be a slowdown in growth. Whoever comes after the election will pay the price. We have entered a spiral that solidifies inflation at around 35-40 percent. If the president and parliament change, growth will slow for 3-4 quarters and then there will be a quick recovery. In 2024, inflation will be in the range of 15 to 20 percent. Whoever comes, we will not be able to see the growth rates we are used to. It is very difficult for 2023 inflation to fall below 35 percent,” he said.

Price chaos in Turkey

Economist Cevdet Akçay, on the other hand, drew attention to the price chaos in Turkey and continued as follows: “The price of any TL-denominated financial asset is not correct. Such an environment is very difficult. In one period, Turkey was unable to break 8 percent inflation. Probably in 1-1.5 years the inflation level of the regime, which we have a hard time breaking, will reach 30 percent. The burden of this is great. For two years, the situation in Turkey has been turbulent. The root of all evil is inflation.