BY ALAATTIN AKTAS
It is said that savings should be increased as the country. Expanding the economic instrument range and shifting consumption are seen as the primary ways to increase savings. This is correct on paper. However, the exact opposite is behavior is observed in the inflation environment in Turkey.
It’s hard to save money in this environment. However, it’s harder to protect the money against inflation if it can be saved.
There’s no space to save. Official inflation exceeds 85% and holding deposits means spending from the principal every day. The general state of government debt securities (GDS) is similar.
Some savers have headed for the FX-protected TRY deposit accounts (KKM). The return from KKM equals the FX rate hike and the FX rates are slightly higher than inflation. So, there is a limited return, which has already disappeared over the past three months.
Only the stock exchange remains a viable financial investment space. The stock exchange brought in profit in real terms in the last year. But how many savers, or how much of their savings, are held on the stock exchange?
There must be a savings instrument to provide a return above inflation. But is there any such instrument in this period? Or are we experiencing the exact opposite?
Instead of finding solutions, the government finds a scapegoat. For example, residential property prices are increasing drastically. This makes sense. If a saver has lost more than one-third of his savings as of October and believes he will experience a similar situation in the coming period, he will want to use that money in another way. He will be fully justified in his choice.
He will buy a house if he can, or perhaps a car, because he knows that the price of both the house and car will increase higher than the return he could get from the interest rate. Moreover, he doesn’t have a substantial return from the interest rate and his principal is melting.
So, prices are surging in some fields as savings don’t bring in real terms. Especially in the housing market. Of course, there are other factors raising house prices, but this is among the fundamental factors: the desperation of citizens in evaluating their money.
But, how were the 3-month and 6-month returns positive for GDS? Because the interest rates for GDS were cut.
Let’s call those that hold GDS the ‘interest rate lobby’ – the government has helped them out quite a lot.
Low-interest rates are good, but those who hold GDS simply want the interest rate to decline. The real interest rate lobby is those who buy debt securities and then wait for the interest rate to decline.