Economy in Turkey: “Devastating effects of high inflation on the middle class”
According to many experts, there devastating effects of high inflation on the middle class in Turkey. It is a fact that “The middle class is essential for a stable economy” because it emphasizes the importance of the middle class as a key driver of economic growth and stability.
The CEO of Beşiktaş Culture Center, shared an interesting observation on CNBC-e regarding ticket sales for shows. She said, “the most expensive and the cheapest tickets sell out first, while the middle category tickets sell more slowly.” This trend, unprecedented in the past, is seen as an indication that the middle class is under economic pressure. Previously, there was no such clear distinction in ticket sales, but now a sharp division is evident.
According to the 2023 “Income Distribution Statistics” released by the Turkish Statistical Institute (TÜİK), income inequality in Turkey has worsened, and the situation of the middle class continues to deteriorate. High inflation exacerbates income inequality, favoring the upper-income groups and weakening the middle class. On the other hand however, the middle class is a crucial source of consumer demand and a foundation for economic growth.
The Brookings Institution notes that the middle class encompasses 60% of household income distribution. The purchasing power of the middle class supports businesses and fosters economic growth. Thus, a strong economy requires a strong middle class, which in turn necessitates balanced income distribution.
An analysis by Şeyda Uyanık in EKONOMİ newspaper highlighted that income inequality in Turkey had worsened due to inflation. According to TÜİK’s 2023 data, the Gini coefficient has risen to 0.44, indicating greater income disparity. The gap between the richest 10% and the poorest 10% has widened, and the share of income held by the wealthiest 20% relative to the poorest 20% has also increased. This trend is not unique to Turkey; data from many countries show that the share of income held by the middle class has been decreasing over the years, with wealth becoming concentrated in the top 20%.
As former U.S. President Barack Obama pointed out, “The middle class is the backbone of the economy. If they are doing well, the economy is doing well.” However, the concept of the middle class is not purely economic; it also represents a critical social segment that shapes societal dynamics. A strong middle class is essential for a functioning democracy. Weakening the middle class leads to damage beyond the economy, affecting social and political structures as well. (Edited / translated from source on ekonomim.com)
