The country’s program to slash interest rates sent prices to a 24-year high last year
View of the suburb Karaköy with the Galata Tower, Galata Kulesi, seen from the fish bread restaurants at the Bosporus canal. © Frank Bienewald / LightRocket via Getty Images
The UN expects inflation in Türkiye to fall to an average of 42.4% by the end of the year, much higher than the country’s own official projections, The World Economic Situation and Prospects report, published on Wednesday, says.
Results reported in the UN study cast doubt on the country’s program to tackle inflation by slashing interest rates. Türkiye began easing rates in 2021 in an effort to support economic growth, to boost exports and investment as well as to fight unemployment.
The policy, however, led to a crisis with national currency losing nearly 30% of its value last year. In October 2022, Turkish price growth hit a 24-year high of 85.5% and then eased somewhat to 64.3% in December.
Economists expect a decline in inflation to be more moderate than Ankara’s official forecast, which sees it slowing to 24.9% this year and dropping further to 13.8% in 2024. The largest price increases in 2022 were registered in housing (79.83%), food and non-alcoholic beverages (77.87%), and in transportation (54.45%).
The UN report projects Turkish GDP to grow by 3.7% this year and by 3.5% in 2024.
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