Erdogan Says Inflation Not 'Insurmountable Threat'

Turkish President Recep Tayyip Erdogan attends a meeting with Russian President on the sidelines of the Shanghai Cooperation Organization (SCO) leaders' summit in Samarkand on September 16, 2022. (AFP)

Turkish President Tayyip Erdogan said inflation is not an "insurmountable economic threat," adding it will begin to fall at the end of the year after it surged to more than 80% in August.

Under Erdogan's economic program, Türkiye gradually cut interest rates by 500 basis points at the end of last year, sparking a currency crisis. It cut them by another 100 basis points to 13% in August.

The lira's sharp decline, by 44% last year and another 27% so far this year, stoked prices and, along with surging global energy and commodity prices, pushed inflation to 24-year highs.

"Inflation is not an insurmountable economic threat. I am an economist," said Erdogan, who is not an economist by training.

Speaking to broadcaster PBS, Erdogan said inflation would fall after the end of the year. That view is shared by economists, who say the annual figure will decline beginning in December given the sharp price rises during the same time last year, while on a monthly basis prices will continue rising.

Erdogan added that some countries were threatened by 8%-9% inflation while Türkiye’s was around 80%.

"The racks are not empty in markets in my country. But the racks are empty even in the US, they are empty in France, they are empty in Germany. My citizens can find any type of product they wish at the market," he said, according to a transcript of the interview shared by the presidency.

Türkiye says it aims to lower inflation by first flipping its chronic current account deficits to a surplus.

The surging global commodity and energy prices, and a potential slowdown in exports in the second half, have made that goal all but unattainable this year. Ankara does not see a surplus in the next three years.