Case Study: Socio-economic challenges in Turkey

Turkey's economy experienced periods of rapid credit-driven expansion followed by severe currency volatility and high inflation. In 2017, the economy grew by 7.5%, driven largely by government stimulus and construction. However, external financial shocks and domestic monetary policy decisions weakened the Lira, prompting the International Monetary Fund (IMF) to predict lower growth rates of around 3.1% in the following years.

Inflation has risen drastically. In 2018 inflation reached 20.3% due to the rapid depreciation of the Lira, which increased the cost of imported goods. By 2021, consumer inflation exceeded 19%, forcing up the price of basic necessities.

The Turkish government proposed a fiscal budget that increased social security transfers, but rising inflation meant these increases represented a reduction in spending in real terms.

Turkey's official youth unemployment rate has persisted above 20%. Young people – who represent a large share of the 84 million population – are disproportionately affected. The International Labour Organisation (ILO) estimated youth underemployment at 15.2% during peak crisis years.

The IMF warned that economic growth was not translating into high-quality job creation. This is because recent growth was heavily concentrated in the capital-intensive real estate sector rather than labor-intensive manufacturing.

According to the World Bank, absolute poverty levels fluctuated. While extreme poverty remains low, the relative poverty rate based on local median income thresholds rose to nearly 14.5% by 2020. Over 10 million people were estimated to live close to the poverty line.

Many low-income families depend heavily on municipal welfare support and state food subsidies. Rising costs of living led to a reduction in household consumption. Over the past decade, consumption of dairy, fresh vegetables, and red meat in average households dropped by 25% to 40% as families cut back due to declining real purchasing power.

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