We are by far the cheapest country in Europe

I don’t know as Europe’s cheapest country is strengthening. Don’t take it the wrong way, this cheapness is not for the people living here and earning their pay in lira, it’s for those who spend Euros and dollars.

The European Statistics Office’s purchasing power parity data was announced last week by the Turkish Statistical Institute. Turkey was the cheapest country in Europe in 2018 and 2019. Moreover, we became cheaper last year.

Of course, this wasn’t due to a price decline in Turkey. It happened because the rise in foreign exchange rates was above the rise in prices.

Turkey’s price level index for consumer goods and services decreased to 38 last year. The index stood at 41 in 2019 and 40 in 2018, according to Eurostat data.

The price level index is an indicator of purchasing power of national currencies according to currency conversion rates. If a country’s price level index is higher than 100, the country concerned is relatively “expensive” to the average of a compared country group and if it is lower than 100 then it is relatively “cheap” against the same compared group.

Turkey’s 2020 price level index represents the same basket of goods and services purchased for the cost of 100 Euros in a total of 27 European Union countries, which could be purchased for 38 Euros in Turkey.

The price level index in the last three years first climbed to 41 from 40 then decreased to 38. Let me explain how this happens with a very simple example:

Let’s say the Turkish lira against Euro was TRY 5 in 2019 and the basket of goods and services 100 liras, so this means you can buy this basket for TRY 20. In 2020, a Euro is 10 liras and the price of the same basket of goods and services increases to 150 liras from 100 liras, so it means 15 Euros instead of 20 is enough for it.In other words, Turkey is becoming a cheaper country, not for those living in Turkey and earn liras, but for those living abroad and earn foreign currency, as the foreign exchange rate increases more than rising prices.

Only six countries with a lower income Turkey’s 2020 GDP index value was calculated as 64, according to purchasing power parity. Let me underline that the EU average is 100.

Turkey surpasses only six countries with an index value of 64, that is, its income level: Bulgaria, Montenegro, Serbia, Northern Macedonia, Bosnia-Herzegovina and Albania. Meanwhile, 31 European countries are richer than us.

Our situation is slightly better in terms of actual individual consumption per capita according to purchasing power parity. This value was 72 last year. The EU average is still 100.

Turkey, which was ahead of nine countries in this ranking, lagged behind 28 countries.

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