Economic Watch: Turks reeling from soaring energy prices amid currency plunge

Source: Xinhua| 2021-11-26 18:26:28|Editor: huaxia

ISTANBUL, Nov. 26 (Xinhua) -- Long queues snaked around gas stations in Turkey's largest city and financial hub Istanbul on Wednesday evening as exasperated drivers rushed to fill their tanks ahead of a fresh hike in gasoline price.

"This is depressing," Ahmet Sari, a taxi driver, told Xinhua. "Almost every week, there is a hike. That reminds us of the 1970s," he said, referring to the years when common goods including gasoline were hard to come by due to economic and political turmoil.

The Employers' Union of Energy, Petrol, Gas Supply Stations said gasoline prices would rise by over 1 lira (roughly 0.083 U.S. dollars) per liter from midnight, the latest in a slew of price hikes as the collapse of Turkey's currency, the lira, and rising global energy prices combined to push up the market.

"Regular people are the first victims of price hikes. Let's hope that we will overcome these hard days, but it is very difficult," the taxi driver lamented.

Heavily reliant on foreign energy, Turkey imports over 90 percent of its oil needs and 98 percent of its natural gas from suppliers including Russia, Iran, Azerbaijan, Algeria, Qatar, and Nigeria.

In 2019, the country's energy import costs were 41 billion dollars, accounting for almost 20 percent of the value of its total imports of 210 billion dollars, according to official data.

"Turkey is heavily dependent on foreign countries for its energy needs, and with the depreciation of the lira, its energy bill will inevitably soar," Baki Demirel, an economist and scholar at the northwestern Yalova University, told Xinhua.

The economist said that Turkey, which suffered from high inflation nearing 20 percent and a weakening currency, feels the global energy price increases "more acutely."

Turkey raised the price of natural gas used by power plants and industry by nearly 50 percent in early November, and consumer gas price hikes may be around the corner as cold winter days approach.

In some provinces, workers earning minimum wage (240 dollars) have reverted to coal or wood stoves for heating, trying to make ends meet as their bills have become more expensive, local press reported.

Following a series of interest rate cuts by the central bank, the lira has lost about 40 percent of its value against the U.S. dollar this year amid rampant inflation, raising the cost of living and prompting volatile economic prospects for the G20 nation.

The lira dipped on Tuesday to a record low against the dollar at 13.50 versus the greenback.

Defending the rate cut policy, Turkish President Recep Tayyip Erdogan earlier this month said Turkey is committed to an economic policy that is "focused on investment, production, employment and exports."

Demirel warned that the Ankara government's efforts to prioritize growth might also be compromised by the lira's decline.

"The government is betting on high growth. However, this would generate higher energy consumption, overproduction, and ultimately higher costs, which could hamper the production system," Demirel noted. Enditem

KEY WORDS: Turkey,Energy,Costs