How did Turkey manage to be more expensive than Europe?
There is an easy answer to this question, but first let me explain the title. Anyone who spent their holidays in Europe has compared the prices in Turkey to the prices in Europe on their social media accounts, pointing out the fact that cafes and restaurants are both cheaper than and superior to those in Turkey in terms of quality. They are not wrong.
The interesting part is that it is not just the high-income earners who share these posts on social media. The middle-income earners also say that it was important for them to be able to find cheap flight tickets and travel to Europe with their family. I have received a lot of messages from people comparing restaurants, kebab shops, döner shops, grocery stores, markets and other service providers in their own neighbourhoods to their counterparts in Europe and they have all been complaining about the high prices in Turkey.
The biggest mistake of the government in Turkey is to keep the foreign exchange rates in check. I have been saying the same thing since forever… . When the dollar rises, prices rise too, but when you push the dollar further down, prices rise even higher. Because the dollar’s exchange rate to lira does not increase while inflation keeps increasing. The price of a product or a service worth 100 dollars remains stagnant in Turkish lira terms but its price in dollar terms rises to 150 dollars. And then, just like after the general elections, 100 dollars goes from TRY 1900 to TRY 3250, but the price of the product becomes TRY 4875, which means it jumps from TRY 1900 to TRY 4875, with an increase of 156%. However, outside Turkey, the same product or service increases from $100 to $110. Obviously, the price of certain goods or services go up drastically, but such increases do not affect tourists.
Turkish citizens travelling to Europe buy any product, from trainers to shirts, at much cheaper prices than could be found at home. The same product can be up to 20% more expensive in Turkey. Besides, as a tourist, you receive tax refunds at the airport or border gates, which means, whatever you buy will be at least 30% cheaper than the prices in Turkey. The Central Bank officials, who have no idea how real life works, want to cancel the instalment scheme in credit card spending and this will further cause people to spend their money abroad. Even people with no financial means to travel abroad will ask their family or friends who go to Europe to buy whatever they need for them. In fact, people are already doing this.
The excessive influx of immigrants and millions of foreigners living in Turkey are among the reasons that have contributed to the rapidly deteriorating economy. According to many foreigners living in Turkey, “Turkey has become more expensive than anywhere else in the world.” Some holiday resorts generate almost all of their revenue from international tourists. So, afraid that they could lose their customers, they chose not to increase their prices excessively. Meanwhile, as noticed by all domestic travellers, services provided by Turkish Airlines, especially in-flight quality and Wi-Fi connection, have been worsening for quite some time. As the country is becoming more expensive, Turkey’s own airline sells the most expensive tickets to its own people and fly them in the oldest airplanes.
Since almost all of the people who applaud Turkey’s monetary and fiscal policy are quite well-off and are living with one foot abroad, they do not care about the fast worsening situation in the country. They do not care about the policy rate that lags behind the inflation number, or the controlled exchange rates, or the government that tries to take away people’s right to pay in instalments for the things they really need (just think about the current prices of white appliances in Turkey and the fact that you need them to ‘survive’), or the ever-rising cost of living. The important thing for them is further decrease in CDS premiums should, earning more money from the stock market, buying cheap dollars and euros to put them aside.
The bottom line is: a government that keeps making mistake after mistake unfortunately and hopefully unintentionally encourages sellers and providers in a country to take advantage of others who earn their money by working hard, oftentimes at thankless jobs. People who pave the way for opportunists to exploit people’s hard-earned money are as much to blame as the opportunists themselves.
