Turkey's 2021 results: high inflation and the lira’s fall

At the end of 2021, the inflation rate in Turkey reached a 19-year high. The reason for this was the currency collapse, which led to a sharp increase in the cost of imports. At the same time, commodity prices rose by 36% in December compared to the same period of the previous year. 

Price increases were also driven by nearly 54% year-on-year growth in transportation costs. The cost of food and beverages increased by 43.8%. Prices for household appliances and hotel services have increased by more than 40% compared to last year. 

Over the past year, the Turkish lira has lost more than 40% in value against the US dollar. Such a sharp drop was caused by the new policy of the Central Bank of the country - lowering interest rates, not raising them, in the face of rapidly rising prices. At the same time, this course was supported by the President of the country, declaring foreign intervention the main cause of Turkey's economic problems. 

Soaring prices and a depreciating currency have already forced the government to take a series of emergency measures to try to protect workers and savers. So, in November 2021, Erdogan announced an increase in the minimum wage in the country by almost 50%, and also announced the creation of a new type of deposit account in the Turkish lira, the purpose of which is to protect depositors from devaluation. 

On January 4, 2022, Recep Tayyip Erdogan delivered a speech regarding Turkey's economic policy for the current year. The President noted that despite the difficulties, the country will stick to the course taken. The new economic model, which prioritizes the growth of production, exports and investment, will make the state much more developed. According to Erdogan, the export figure of $225 billion for 2021 shows that the country is on the right track.