Prof. Dr. Hayri Kozanoğlu evaluates the economic outlook

Kozanoğlu stated, "In the current economic environment, it seems like a pipe dream to think that Turkey will benefit from global developments or that windows of opportunity will open for Turkey due to the compatibility between Erdoğan and Trump."

The economic picture is worsening by the day. According to the latest data released, the broad unemployment rate has exceeded 28 percent. Meanwhile, the price of a Republic gold coin has surpassed 22,300 liras, exceeding the minimum wage for the first time in the history of the Republic.

On the other hand, the question of how U.S. President Trump's policies will affect the global economy remains a subject of curiosity...

Prof. Dr. Hayri Kozanoğlu evaluated the economic outlook for 12punto...

Here are those analyses...

WHERE ARE GOLD PRICES HEADED?

In general, when interest rates fall globally, the appeal of interest-bearing products as alternative investment vehicles decreases, and the cost of borrowing to invest in commodities like gold also drops. When these two factors combine, the ounce price of gold remains high. Since exchange rates in Turkey are very volatile, the exchange rate is also one of the factors affecting gold prices.

Because Turkey is experiencing exchange rate changes below the inflation rate—presented as rational under these new economic policies—we are relatively less affected in Turkish Lira terms by global price increases. One should consider that if there is any fluctuation in exchange rates in the coming months, access to gold products, especially Republic gold, will likely become more difficult.

The Central Bank's latest inflation report included information stating that there is approximately 300 billion dollars worth of gold held 'under the mattress' in Turkey.

Gold investment is actually a non-productive investment. In an economy, investments made in gold result in directing savings toward idle resources rather than toward production. Unfortunately, AKP officials, starting with the President, encourage turning toward gold. This leads to savings in society not reaching productive areas. For a country like Turkey, with an economy of approximately 1 trillion dollars, 300 billion dollars is a very high figure.

THERE IS AN INCREASE IN DEBT

Turkey is already experiencing its own internal problems. The economy is drifting toward stagflation, which we define as stagnation within inflation. We were actually expecting this in 2024, but high inflation expectations, especially among companies and individuals, led them to spend by borrowing and not to fear debt. This delayed the stagnation somewhat.

However, the fact that wage increases for retirees, and especially the minimum wage, at the beginning of 2025 will remain below inflation will cause people's purchasing power to decline with each passing day.

Consequently, borrowing continues to rise. There is an increase in uncollectible debts.

In such an environment, it seems like a pipe dream to think that Turkey will benefit from global developments or that windows of opportunity will open for Turkey due to a perceived compatibility between Erdoğan and Trump.

I believe that the decline in people's purchasing power and the resulting increase in poverty will become much more evident in 2025. In fact, even if we take the announced inflation figures as data, our people are primarily affected by the average inflation rate.

In a process like Turkey's, where inflation is very high and showing a gradual downward trend, the average inflation is much higher. Retirees, minimum wage earners, and employees are affected by the average inflation, and the average inflation in Turkey in 2024 was 56 percent.

The Central Bank's inflation forecast for 2025 was raised to 24 percent today, up from 14 percent in August 2024. It is unlikely that this will be realized. I even think we will encounter inflation above the upper band of 29 percent in 2025.

In such a process, the average inflation will again be around 40 percent. On the other hand, there is a difference of up to 30 percent between service and goods inflation.

MONEY PAID FOR INTEREST HAS INCREASED!

One point often overlooked in assessments regarding inflation is this: As interest rates rise, the interest burden on consumer loans and credit card debt, in particular, also increases. If a minimum wage earner currently receiving 22,104 liras is in debt, let's say they were paying 1,000 liras of that money toward interest in 2023, whereas today they are paying 3,000 to 4,000 liras toward interest.

During the 2023 elections, the Central Bank's policy rate was 8.5 percent. Consequently, the costs for consumer loans and credit cards were around 20 percent. Currently, the policy rate has dropped from 50 percent to 45 percent. If we consider the annual costs for both credit cards and consumer loans, they are in the 70-80 percent range. As a result, people are allocating a more significant portion of their budgets to interest. They have less money left for meat, milk, transportation, and other basic needs. Because of this, they are facing a loss of welfare and a cost-of-living crisis that goes beyond the announced inflation figures.

HOW WILL TRUMP AFFECT THE GLOBAL ECONOMY?

With U.S. President Donald Trump taking his seat in the White House for a second time, the world agenda in recent weeks has been dominated by what we might call imperialism in the traditional sense—direct territorial demands and efforts by the U.S. to extract economic concessions from other countries by imposing its power. This is creating significant volatility in stock markets, particularly in gold prices. However, these policies have no real foundation!

They also carry dangers for the U.S., such as fueling inflation, increasing unemployment, and slowing down growth. I believe that the vulnerabilities in stock markets and financial systems, especially in metropolitan capitalist countries, including the U.S.,

will lead to serious fluctuations during the Trump era, and I anticipate that 2025 will bring about a serious economic crisis or significant volatility and an environment of turmoil.