Turkey’s Inflation Drops Drastically As Presidential Election Nears
Turkey’s inflation rate slowed for a fourth consecutive month in February, official data showed Friday, ahead of May elections in which President Recep Tayyip Erdogan’s economic record will be a key issue for voters.
The inflation report comes as the government prepares to pour billions of dollars into rebuilding huge swathes of Turkey following the massive earthquake that struck on February 6.
Scores of cities were devastated and more than 50,000 people were killed in Turkey and neighboring Syria, leaving millions needing urgent need.
Before the disaster, Erdogan’s government was already fighting runaway inflation and mending fences with rich Gulf countries to keep its economy afloat.
The spending for post-quake recovery could turbo-charge consumer spending and industrial production, two key indicators of economic growth, but also spur a rebound in inflationary pressures.
Consumer prices grew at an annualized rate of 55.2 percent in February, down from 57.7 percent in January and 64.3 percent in December, the state statistics agency said.
It peaked at 85.5 percent last October, the highest rate during Erdogan’s two decades of rule.
Official inflation rate is contested by independent economists from the research group Enag, which estimates that consumer prices accelerated again in February to 126.9 percent from 121.6 percent in January.
Timothy Ash of BlueBay Asset Management said that while Turkish inflation was moderating marginally, the headline figure remains over 55 percent year-on-year “if anyone still believes official data”.
“Erdogan will want to use the pitch of falling inflation as an election tool and his unorthodox policies are working,” he tweeted.
The estimate does not include the eventual costs of reconstruction that are “potentially twice as large,” the Washington-based institution said.
On Wednesday, Erdogan ruled out any delay in elections even though he said 3.3 million people had been forced to leave their homes in the disaster areas.
The 11 affected provinces are still being hit by strong aftershocks from the quake, which make the likelihood of campaigning in the area extremely unlikely.
Erdogan said the vote would go ahead on May 14 as planned, and Turkey’s fragmented opposition is due to nominate a candidate on Monday.
The president is also sticking with contested economic policies that have deterred many foreign investors, including an ill-fated attempt to fight inflation by slashing interest rates.
Last week, Turkey’s central bank dropped its benchmark interest rate by half a percentage point to 8.5 percent, saying the cheaper borrowing cost would bolster earthquake recovery efforts even as inflation rages.
Erdogan has said the devastated regions will be rebuilt within a year.
The earthquake and its aftershocks caused an estimated $34 billion in damages across Turkey, the World Bank said on Monday.
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