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Story: Turkey inflation at 24-year high; 26-08-2022;
Türkiye's inflation rose to a 24-year-high at 79.6% in July, what are the key reasons behind such soaring inflation rate in the Turkey?
Why there is Inflation in Turkey?
• Higher inflation rates in Turkey are a result of International energy and commodity costs boom. While other major factor is weak performing lira.
The current crisis is a result of multiple targeted attacks on the economy of Turkey, as country went on tussle with ally United States according to many analysts.
The Turkey detend American pastor Andrew Brunson, who was confined of espionage charges after the failed coup attempt in Turkey. Turkey making deal with Russia for air defence system S400, and many other fued with the US government led Turkey to face strict sanctions.
The economic sanctions doubled the tariffs on Turkey.
Then President of US Donald Trump put tariffs on steel up to 50% and on aluminium to 20%. This resulted, in fall of Turkish exports of steel, which previously amounted to 13% of Turkey’s total steel exports, and Turkish lira which fell 20 percent versus the U.S. dollar in a matter of time.
The tariff slashed Turkey’s steel exports to the United States by 56 percent to just below half a million tonnes between January and May.
Steel exports to the U.S. and European Union (EU) market dropped nearly 2.7 million tons between January and November 2019, as compared with the numbers of year 2018.
The United States was its biggest export market before the tariff.
• The U.S. announced on August 1 sanctions on Turkey’s Justice and Interior ministers, prohibiting U.S. citizens from doing business with them.
All these early setbacks to economy paved the way to recession, slow growth of economy in Turkey and put an end to construction boom, good economic growth, under Erdoğan-led government.
Other reasons include, Turkish economy excessive current account deficit and large amounts of private foreign-currency denominated debt.
President Recep Tayyip Erdoğan's unorthodox ideas about interest rate policy.
Current Russia-Ukraine war situation made international energy and commodity costs boom.
Many other reasons did also play a big role in the current high inflation rates in the Turkey.
Dedaandsons Lite.