It is a fact that the fixed wage earners are being crushed under inflation. Especially the situation of those who do not have an asset base among the retired is very sad. High inflation and the difficulty in accessing micro-credit for low-income citizens are seriously straining the living standards of the middle and lower income group. The more ironic part is that they are not even the main segment driving import-based inflation.
In a report I read recently, it seemed certain that the passenger car SCT revenue for 2023 alone would exceed 350 billion liras. One of the biggest tax revenue of the state comes from car sales, probably first one. Due to high inflation and rapid convertibility into cash, the automobile has become the main investment instrument, which is downright absurd, but seems this is OK, for the state.
On a more micro scale, it is possible to see this in the trade of every dollar-based product. A 5 per cent loss of the dollar will return as import volume. This is one of the main problems. Because this has almost become the main investment tool. For this, and if officially erdonomics is left for another spring, the dollar needs to stabilise 'without being suppressed'. The market needs to be convinced of this.
While it is necessary to direct savings to investment, enterprise set-ups or, if there is no such infrastructure, to operate as an investor in existing companies through the BIST in the simplest way, or, to bonds if there is less risk tolerance: As long as we direct it to import-based trade, it will not be easy to rein in this inflation trap. And if you look at the current reports, we will continue to live with high inflation until 2026 at best.
In an environment of high inflation, savings can be invested in foreign currency to prevent them from melting. The stability of the currency may limit the appetite for risk and returns below inflation may limit the impact here. The other issue is to act on import-based goods and commodities. Unless you can limit this path, it is difficult to get results no matter how much you close the first one. Therefore, the government should be careful in its economic policies about which doors to open for savers and which doors to make dangerous. This will determine how soon we will recover or how long we will suffer.
Of course, none of this is investment advice, but the opinion of a layman. I would also like to say that despite these negativities, I expect that we will return to a strong growth performance starting from mid-2024. Production-based growth is our only way out. And this is not only about the steps we will take, the conjuncture is also very favorable for this, and I hope we will not miss this window of opportunity.
