Turkish net disposable income falls, poverty rises after crisis

Turkey’s currency crisis last year meant average disposable income, net of inflation, fell markedly, according to a state-run study published on Wednesday.

Mean annual household income in Turkey climbed by 12 percent to 24,199 liras ($4,260) per year in 2018, the Turkish Statistical Institute said on its website. Inflation was 20.3 percent in December and averaged 16.3 percent during 2018, according to official data.

Turkish spending power has been hit hard by a currency crisis that peaked in August last year. The turmoil led to a surge in prices, higher interest rates and about a million job losses.

The cost of the crisis has been borne mostly by the poorer segments of society. The richest 20 percent of households controlled 47.6 percent of total disposable income in Turkey, up from 47.4 percent in 2017, the institute said. The poorest 20 percent owned 6.1 percent of disposable income, down from 6.3 percent the previous year.

Poverty has also increased. Turkey’s relative poverty rate was 13.9 percent, increasing by 0.4 percentage points from 2017, the institute said. The severe material deprivation rate, which reflects the perception of households about their inability to pay for things such as unexpected financial expenses and a week’s holiday, was 26.5 percent of total households.

The amount of people with debts to financial institutions, apart from housing loans, was 70.4 percent compared with 69.2 percent in 2017. Some 58 percent of people said they couldn’t afford a week’s annual leave away from home.

Fifty-nine percent of Turks lived in their own homes, the institute said.