Turkey’s annual inflation rate is expected to drop to 66.8 percent in December due to a favorable base effect, but only fall to 43.2 percent by the end of 2023, according to a Reuters poll.
This forecast is nearly twice the government’s prediction and could lead to ongoing cost-of-living issues for Turkish citizens, particularly as they prepare to vote in tight presidential and parliamentary elections in the coming year.
Inflation reached a 24-year high of around 85.5 percent in October after rising for 17 months, largely due to President Recep Tayyip Erdoğan’s low interest-rate monetary policy and the resulting currency crisis in 2021.
While prices are expected to continue rising month-to-month, with a median estimate of 2.7 percent, the central bank has lowered its policy rate by 500 basis points since August to 9 percent in an effort to boost exports, production, investment and employment.
However, the lira lost 44 percent of its value against the dollar in 2021 and another 30 percent this year, reaching historic lows. The government hopes its economic program will help turn Turkey’s current account deficit into a surplus and lower inflation, but economists only predict a drop to 43.2 percent by the end of 2023.