Dark days for Turks as Erdogan atones for economic errors

By Birsen Altayli

ISTANBUL (Reuters) – Many Turks feel anxious and ashamed about their eroding living standards, paying the price for President Tayyip Erdogan’s past economic missteps even as there are signs that the country is beginning to exit its cost-of-living crisis.

Six years of punishing inflation, combined with a sharp clampdown on credit over the last year, has given retirees and salaried workers a chilling brush with poverty, data shows, testing Turkey’s social fabric more than at any other time during Erdogan’s more than two decade rule.

Turks say they are now slipping cash to retired parents and grandparents, in a reversal of Turkish custom, even as they themselves struggle to pay monthly bills and forgo modest luxuries such as restaurants.

Erdogan has urged patience but 2024 is emerging as the most trying in a generation for Turks, whose economic fortunes have rapidly deteriorated since the first in a series of currency crashes in 2018.

“I may still be walking, but I am not really living,” said Fettah Deniz, 73, whose monthly pension of 13,000 lira ($393) is three times below the designated poverty line of a person in his situation, so his children help him out.

At holiday gatherings he has even avoided his grandchild because he had no extra cash to give – “the plight of many honourable and traditional people in our society,” said Deniz, who helps run a retirees association in Istanbul’s working class Bayrampasa neighbourhood.

Another retiree, Mustafa Yalcin, 69, said he stayed overnight in a hospital during a trip to Gaziantep because he couldn’t afford a hotel and didn’t want to burden relatives there who would feel obliged to feed him.

The government proposed a boost this month that should raise the average monthly pension to about 14,000 lira from 12,000.

More than half of workers meanwhile live on or around the minimum wage of 17,002 lira, which is not expected to rise despite calls from the political opposition.

That compares to an estimated poverty line that has shot up to 61,820 lira ($1,870) for a family of four in Ankara, Turk-Is, a top union, said in a report last month. Another union, DISK, found that last year’s average pension was one-sixth of those in central European countries.

REINVENTING ERDOGAN

Such hardship could erode support for Erdogan, pollsters say, especially after pensioners helped hand his conservative AK Party its worst ever loss in March local elections.

As the economy slows further and employers trim jobs as expected in coming months, it could also test Erdogan’s patience with the turnaround programme that he launched last year when he picked Mehmet Simsek as finance minister.

Since June 2023, the central bank’s new leadership has hiked interest rates from 8.5% to 50% – the highest in emerging markets – in order to cool inflation that topped 75% in May.

It’s a shock reversal of the preceding five years in which Erdogan – describing himself as an “enemy” of interest rates – pushed an easy-money policy to boost economic growth despite soaring prices, and sacked five central bank governors.

Largely as a result of this unorthodoxy, the lira shed more than 85% to the dollar since 2018, foreign investors mostly fled the country and FX reserves touched all-time lows before finally rebounding this year.

Erdogan has repeatedly backed the new programme, while the central bank says rates will remain high. Analysts say inflation began what will be a sustained fall in June, while ratings agencies have upgraded Turkish assets and many foreign investors have returned.

‘TRAPPED’

But on the streets, fallout is harsh.

Silan, 28, has earned regular pay rises working in the private sector but says she still cannot live comfortably in Istanbul on only 50,000 lira a month and cannot afford to leave.

“I feel trapped,” she said. “It’s not possible to live the life we think we deserve.”

Renters and landlords often quarrel bitterly over prices given housing inflation nearly doubled over the last year, while house prices jumped nearly 50%, data shows.

In Istanbul, restaurant prices are approaching those of London and Dubai.

“Eating out and vacationing is entirely out of the question,” said Aynur, 58, who works at a financial firm.

“You don’t want people to come over because you can’t afford to host them. My social life has ended.”

A recent poll by Konda found half of respondents could “barely” make ends meet, while 30% fared worse still. Some 83% said Turkey was in an economic crisis.

The rate hikes have left credit unaffordable for many, but have also left lira deposit rates attractive for those with assets. The annual rate has roughly doubled to more than 60% in a year, data shows.

Gulseren, 64, said she sold a few properties in Izmir and invested in some high-interest accounts “to maintain” living standards. “But even this is not sustainable because our total savings are also diminishing against inflation,” she said.

($1=33.0689 liras)

>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : Investing.com – https://www.investing.com/news/economy-news/analysisdark-days-for-turks-as-erdogan-atones-for-economic-errors-3524947