Turkey's central bank raises inflation estimates to 60% by end of year

By Al Mayadeen English
Source: Agencies
28 Jul 2022 17:28

With consumer inflation skyrocketing and the Turkish lira experiencing unbridled volatility, Turkey's economic growth has been facing serious challenges since the beginning of 2021.

Turkey's central bank raises inflation estimates to 60% by end of the year

The Central Bank of Turkey raised the estimates for consumer prices to 60.4% by the end of the year 2022.

It stated in a report published on Thursday that "the disinflationary process is expected to start with the steps taken and resolutely implemented to achieve sustainable price stability and stronger financial stability as well as the re-establishment of the global peace environment. Accordingly, inflation is projected to be 60.4% at the end of 2022; fall to 19.2% at the end of 2023, and sustain the downward trend by receding to 8.8% by the end of 2024."

The Central Bank forecasts reveal that year-end inflation has been raised by 17.6 percentage points from 42.8% projected in April.

“We will continue to take steps to ensure that all interest rates converge to the policy rate. The lira-ization strategy is going well. We can take some additional measures in the process if necessary," said Central Bank Governor Şahap Kavcıoğlu on Thursday.

“Geopolitical tensions and rising commodity prices, especially for energy, add to the downside risks to global and regional economic activity expectations for 2022. There are more downside risks to external demand than in the previous reporting period, indicating regional divergences may become more evident. Moreover, the Russia-Ukraine war poses risks to travel and transportation revenues. Meanwhile, geopolitical risks, new COVID variants and waves, and their effects on domestic and international demand conditions are closely monitored,” he added.

With consumer inflation skyrocketing and the Turkish lira experiencing unbridled volatility, Turkey's economic growth has been facing serious challenges since the beginning of 2021. If the war in Ukraine raised fears of further increasing inflation with the surge in energy prices and raw materials, it is mainly the collapse of the Turkish lira that explains the inextricable situation in which Turkey has been drowning itself for several months. The national currency has, in fact, lost 44% against the dollar in 2021.