Many Turks are avoiding non-essential shopping and driving their cars, giving weight to predictions that the country is entering a sharp economic downturn.
Highways and stores have become noticeably quieter after inflation surged to the highest levels since 2002 last month, making borrowing more difficult, and COVID-19 cases spiked in January, Dünya newspaper reported on Monday.
A huge tightening in financial conditions means Turkey is now faced with economic recession, Robin Brooks, chief economist for the Institute of International Finance (IIF) said at the weekend.
“Despite discounts in shopping malls and street stores, shopping has decreased significantly,” said Sinan Öncel, head of the United Brands Association (BMD), according to Dünya. The number of tourists purchasing goods had also dropped sharply, he said.
“It seems that the declines in question will become much deeper in the coming period,” Öncel said.
Turkey’s consumer confidence dropped to 68.9 in December, extending the lowest level since records began in 2004, after the lira slumped against the dollar and inflation jumped to 36.1 percent. JPMorgan predicted this month that annual price increases may reach 55 percent by May.
Inflation in Turkey has surged after the central bank cut interest rates to 14 percent in December from 19 percent three months earlier to help stimulate the economy and lending by banks. But the rate reductions have had the opposite effect, Brooks said.
“Financial conditions have tightened very sharply, which is leading to deep recession,” he said.
Turkish President Recep Tayyip Erdoğan, who claims interest rates are inflationary and against Islamic teachings, is seeking to railroad economic growth ahead of presidential and parliamentary elections scheduled for June next year. Some commentators are now saying that Turkey’s economic troubles may mean that the vote is brought forward to this year.
Öncel said Turkish retailers normally saw a drop off in trade during January, but the declines are far more pronounced this time round.
A jump in petrol prices meant many Turks were only using their cars for essential tasks, Dünya reported. Traffic density halved to around 40 percent on Saturday from as high as 80 percent in some weeks, it said. Data published by the Istanbul municipality showed a significant decline in congestion, the newspaper said.