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Although inflation is a problem that many countries worldwide are facing — coupled with the effects of the war and fuel shortages — Turkey has especially been hit hard.

The country’s official inflation rate has shot up to almost an eye-watering 70% in April, with seemingly no end in sight.

This article will go over the current inflation crisis in Turkey, as well as how this will affect tourists and much more. 

If you’re going to apply for a Turkey eVisa or already have one, this information will certainly come in handy when planning your upcoming holiday.

Turkey’s Inflation Crisis: What’s Going On

Despite having cracks in the economy for many years, Turkey’s fiscal problems snowballed out of control during the last two years.

Just like many other countries around the world, Turkey had to shut down in March of 2020 to stop the spread of the coronavirus, which, in turn, nosedived many lucrative industries. These included travel and tourism, agriculture, and manufacturing, which make up more than half of the country’s GDP. 

In fact, according to a Kearney study, Turkey experienced a $5 billion USD drop in tourism revenue in 2020, and hotel occupancy rates fell under 30% in some of the most popular tourist destinations. 

Due to the pandemic’s sudden closure of many factories, tourism facilities, and food & beverage establishments, Turkey made the decision to inject the country with billions of dollars to jumpstart the economy. 

Although this was an excellent idea in the short term — Turkey had the highest growth rate among G20 countries in 2021 — it also deteriorated macro-financial decisions. In November 2021, the Turkish lira quickly depreciated to record lows while inflation spun out of control. Turkey posted more than a 20% annual hike in consumer prices in November 2021, and by March 2022, the inflation rate rocketed to 61%. 

However, this isn’t the first time Turkey’s inflation has soared: the country experienced an inflation rate of 94% in 1980 and again in 1994, with an astounding 105%. 

In addition to inflation, the country is facing a currency crisis. In May 2017, $1 USD was around 3.50 TRY and remained relatively stable until the end of 2021. It reached an all-time high of $1 USD to 18.41 TRY in December 2021 before falling to between 11 to 13 TRY. 

Even with a rebound, the Turkish lira is still struggling: in the past two months, it has been inching closer to its previous peak and is currently trading at almost $1 USD to 16 TRY. 

How Inflation Will Affect Tourism in Turkey

Experts forecast that Turkey’s tourism will return to pre-pandemic levels in 2022 and believe that tourism revenues will hover around $34.5 billion this year, according to Finance Minister Nureddin Nebati. 

Despite this positive outlook, hoteliers and hospitality experts are still worried. Turkey’s high inflation and sharp rises in food, utilities, and other basic products mean that profits from tourism will be limited. 

According to Muberra Eresin, head of the Hotel Association of Turkey, profit margins have been significantly cut due to sharp cost increases. She continued, “We have already signed contracts with operators and set our prices. It’s not possible to reflect all these additional costs on our prices now.”

While this is an unpleasant surprise for hoteliers, travellers who have pre-booked their holidays in Turkey have unknowingly secured bargain deals. 

In fact, Turkey’s popularity as a holiday destination has skyrocketed, especially over the past few years. The country welcomed more than 50 million tourists in 2019, which was a 460% increase over the number of arrivals in 2000. 

In less than two decades, the country has positioned itself as a budget-friendly country thanks to its all-inclusive resorts, aggressive expansion of budget airline routes, and simplification of its electronic visa policy. To put it in perspective, the average nightly price of a 5-star hotel in Turkey is around $75, versus $200 to $220 in Spain. 

The most tourist arrivals come from Europe and the Middle East: Russian tourists took the top spot, at 7 million arrivals in 2019, followed by Germans, Bulgarians, British, Iranians, Georgians, and Ukrainians. 

According to travel research agency Skift, Europeans have already started booking trips — just in time for Turkey’s tourist season. 

“Early bookings started with high speed. We’ve got strong bookings, especially from Britain. They’re almost in line with 2019,” noted the vice-chair of the Turkish Hoteliers Federation, Bulent Bulbuloglu.

Tourists who opt to avoid all-inclusive hotels and travel independently across Turkey may feel the strain of the country’s inflation — especially those who have visited in past years.

Inflation in hotels and restaurants has jumped nearly 50% in February 2022 compared to the previous year, as well as transportation (68%), food and drinks (55%), and alcoholic beverages (22%) — all things that tourists typically consume during their trip. 

Despite rising prices and inflation, Turkey still remains a popular destination, as it is expected to host around 30 million tourists this year.