Turkey’s Central Bank will release its annualised inflation data for February today; analysts expect a very slight dip from 20%
Turkey’s Central Bank will release its annualised inflation data for February today; analysts expect a very slight dip from 20% to 19.9%
The fallout of the 2018 currency crisis continues with shortages in basic drugs such as insulin, blood pressure medication and antibiotics. Price freezes announced in February 2018 were designed to keep pharmaceuticals at the equivalent of 15% of the Euro exchange rate for 1 Turkish Lira. By mid-2018, pharmaceutical companies were reeling from the low prices they were being forced to accept—exacerbated by a 30% devaluation of the Lira, resulting in companies refusing to supply medicines or leaving the Turkish market altogether.
Expect these price freezes to continue despite massive lobbying by pharmaceutical companies because President Tayyip Erdogan’s main support base comes from lower working class voters who would be hit by high prices. He has recently promised inflation will be cut to 6-7%. This signals that Erdogan’s government will continue intervening directly into the economy to battle the effects of inflation.
However, this will likely drive investment out of the country with more pharmaceutical companies—reeling from price freezes—exiting the country. Ultimately, Erdogan’s voters will still be hit by way of drug shortages, encouraging the growth of illegal black markets to service the demand.
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