World

Turkey’s inflation soars to 36 percent, highest in Erdogan era

Turkey's annual inflation rate surged to 36.1 percent last month, its highest in the 19 years Tayyip Erdogan has ruled, laying bare the depths of a currency crisis engineered by the president's unorthodox interest rate-cutting.

In December alone, consumer prices took a rare step into double-digits, rising 13.58 percent, Turkish Statistical Institute data showed on Monday, eating deeper into the earnings and savings of Turks rattled by the economic turmoil.

The year-over-year CPI outstripped a median Reuters poll forecast of 30.6 percent with staples such as transportation and food – which took increasing shares of households' budgets during 2021 – rising even faster.

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Turkey's lira shed 44 percent of its value last year as the central bank slashed interest rates under a drive by Erdogan to prioritize credit and exports over currency and price stability.

On Monday it whipsawed down 5 percent then up 3 percent, before trading flat at 13.22 versus the dollar at 1500 GMT.

Some economists predict that inflation could reach as high as 50 percent by spring unless the direction of monetary policy is reversed. Goldman Sachs said it would remain above 40 percent for most of the year ahead.

“Rates should be immediately and aggressively hiked because this is urgent,” said Ozlem Derici Sengul, founding partner at Spinn Consulting in Istanbul.

The central bank was however unlikely to act, she added, and annual inflation “will probably reach 40-50 percent by March”, by when administered price rises would have been added into the mix, including a 50 percent minimum wage hike.

Turkey now has the eighth-highest inflation in the world, behind Zimbabwe and Argentina and ahead of Iran and Ethiopia, according to a Trading Economics listing.

Last year was the worst for the lira in nearly two decades, while the annual CPI was the highest since the 37.0 percent reading of September of 2002, two months before Erdogan's AK Party first took office.

But Erdogan's focus on Monday was on trade data which showed exports surged by a third to $225 billion last year.

“We have only one concern: exports, exports and exports,” he said in a speech, adding the trade data showed a six-fold rise in exports during his tenure as leader.

To support the local currency and replenish its depleted reserves, the central bank said on Monday it had asked exporters to sell 25 percent of their hard-currency revenues to the bank for lira.

“We don't go out”

Erdogan, a self-declared enemy of interest rates, overhauled the central bank's leadership last year. The bank has slashed the policy rate to 14 percent from 19 percent since September, leaving Turkey with deeply negative real yields that have spooked savers and investors.

The subsequent accelerating surge in prices and drop in the lira have also upended household and company budgets, scuttled travel plans and left many Turks scrambling to cut costs. Many queued last month for subsidized bread in Istanbul, where the municipality says the cost of living is up 50 percent in a year.

“We don't sit with our friends in a cafe and drink coffee any more,” Mehmet, 26, a university graduate, said as he did his job as a pollster in Istanbul.

“We don't go out, just from home to work and back again,” he said, adding that he was buying smaller meal portions and believed inflation was higher than official data showed.

The central bank has argued that temporary factors had been driving prices and forecast a volatile course for inflation, which – having been around 20 percent in recent months and mostly double-digits over the last five years – it said in October would end the year at 18.4 percent.

Sengul suggested that, with Monday's data, that argument had run its course.

“This reflects a vicious cycle of demand-pull inflation, which is very dangerous because the central bank had implied the price pressure was from cost-push (supply constraints), and that it couldn't do anything about it,” she said.

Reflecting soaring import prices, December's producer price index rose 19.08 percent month-on-month and 79.89 percent year on year. Annual transportation prices soared 53.66 percent while the food and drinks basket jumped 43.8 percent, the CPI data showed.

The economic turmoil has also hit Erdogan's opinion polls ahead of a tough election scheduled for no later than mid-2023.

The lira touched a record low of 18.4 against the dollar in December before rebounding sharply two weeks ago after state-backed market interventions, and after Erdogan announced a scheme to protect lira deposits against currency volatility.

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World

Saudi Arabia on track to achieve UN Sustainable Development Goals by 2030: Minister

Saudi Arabia is on track to achieve the United Nations’ Sustainable Development Goals (SDGs) by 2030, the country’s Deputy Minister for Water told the UN this week.

Dr Abdulaziz al-Shaibani – who headed the Kingdom’s delegation participating in the UN 2023 Water Conference in New York between March 22-24 – said the Kingdom will achieve its goals thanks to the restructuring of the water sector and the development of the National Water Strategy, state news agency SPA reported Friday.

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Saudi Arabia has allocated $80 billion for water projects within the coming years as part of Saudi efforts to achieve universal and equitable access to safe and affordable drinking water for all.

Dr. Al-Shaibani added that the Kingdom launched Vision 2030 and adopted the National Water Strategy in line with the goals of sustainable development.

The National Water Strategy aims to preserve water resources, protect the environment, and provide high-quality and efficient services.

The objectives of the National Water Strategy are in line with SDG6 in enabling access to clean and safe water globally.

“The Kingdom aspires to provide sanitation services to all by increasing the percentage of the population covered by sanitation services to be more than 95 percent by 2030. Also, KSA established the National Water Efficiency and Conservation Center,” Dr. Al-Shaibani added.

He noted that sustainable and resilient water management was on the G20 agenda during Saudi Arabia’s presidency and stressed that the Kingdom is on the right track to improving water demand management in agriculture to achieve SDG6.

The 2030 Agenda for Sustainable Development, adopted by all United Nations Member States in 2015, saw all 193 member countries of the UN unanimously adopt a landmark set of development goals intended to accelerate the world’s efforts to eradicate poverty, end hunger, protect the oceans and address climate change by 2030.

The 17 sustainable development goals are broken down into 169 specific targets that each country has committed to try to achieve voluntarily over the next 15 years.

Saudi Arabia progresses with its 2030 climate action plan: Energy Minister

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World

South Korea’s Yoon vows to make North pay price for its provocations

South Korean President Yoon Suk Yeol said on Friday he will make sure North Korea pays a price for its “reckless provocations”, hours after the North said it has tested a new nuclear-capable underwater attack drone.

North Korean state news agency KCNA said on Friday it tested a new nuclear underwater attack drone under leader Kim Jong Un's guidance this week, as a US amphibious assault ship arrived in South Korea for joint drills.

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The North's state news agency also confirmed it fired cruise missiles during the weapon test and firing drill that took place from Tuesday to Thursday.

During the drill, the North Korean drone cruised underwater for over 59 hours and detonated in waters off its east coast on Thursday, the KCNA said. It did not elaborate on the drone's nuclear capabilities.

The drone system is intended to make sneak attacks in enemy waters and destroy naval striker groups and major operational ports, the KCNA said.

“This nuclear underwater attack drone can be deployed at any coast and port or towed by a surface ship for operation,” the news agency said.

World

Ukraine prepares counteroffensive as Russia’s assault on Bakhmut flags

Ukrainian troops, on the defensive for months, will soon counterattack as Russia’s offensive looks to be faltering, a commander said, but President Volodymyr Zelenskyy warned that without a faster supply of arms the war could last years.

Zelenskyy said Europe must increase and speed up its supply of weapons, again calling for long-range missiles, ammunition and modern aircraft, and impose additional sanctions on Russia.

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“If Europe waits, the evil may have time to regroup and prepare for years of war,” a clearly frustrated Zelenskyy said on Thursday in a video address to European Union leaders, delivered from a train.

At the EU summit, leaders approved a plan agreed by foreign ministers on Monday to send 1 million artillery shells to Ukraine over the next year. They also discussed global food security and sanctions on Russia.

Britain has pledged to supply armor piercing munitions containing depleted uranium to help destroy Russian tanks, a step President Vladimir Putin said would force a response from Russia as the weapons had “a nuclear component”.

Slovakia said on Thursday it had handed over the first four MiG-29 jets it has pledged to Ukraine, with the rest to be delivered in weeks.

Ukraine’s top ground forces commander Oleksandr Syrskyi said his forces would soon begin a counter offensive after withstanding Russia’s brutal winter campaign.

He said Russia’s Wagner mercenaries, who have been at the front line of Moscow’s assault on eastern and southern Ukraine, “are losing considerable strength and are running out of steam”.

“Very soon, we will take advantage of this opportunity, as we did in the past near Kyiv, Kharkiv, Balakliya and Kupiansk,” he said, listing Ukrainian counteroffensives last year that recaptured swathes of land.

There was no immediate response from Moscow to suggestions its forces in Bakhmut were losing momentum, but Wagner boss Yevgeny Prigozhin issued statements in recent days, warning of a Ukrainian counterassault.

On Monday, Prigozhin published a letter to Russian Defence Minister Sergei Shoigu, saying Ukraine aimed to cut off Wagner’s forces from Russia’s regular troops.

Reuters journalists near the front line north of Bakhmut saw signs consistent with the suggestion that the Russian offensive in the area could be waning. At a Ukrainian-held village west of Soledar, on Bakhmut’s northern outskirts, the intensity of the Russian bombardment noticeably lessened from two days earlier.

“It was really hot here a week ago, but in the last three days it has been more quiet,” said a Ukrainian soldier who used the call sign “Kamin”, or “Stone”.

“We can see this in the enemy’s air strikes. If before there were five-six air raids in a day, today we had only one helicopter attack,” said the soldier.

A slowdown by Russia in Bakhmut could mean it is diverting its troops and resources to other areas.

Britain said on Thursday that Russian troops had made gains further north this month, partially regaining control over the approaches to the town of Kreminna. Intense battles were also under way further south.

Ukrainian military analyst Oleh Zhdanov agreed with that assessment. He said on YouTube that Russia’s attacks on Bakhmut were decreasing, and it was shifting its efforts south to the town of Avdiivka.

Russia’s forces have become more active in areas to the north in the Kharkiv and Luhansk regions as well as central Zaporizhzhia and southern Kherson regions, he said.

Any shift in momentum in Bakhmut, if confirmed, would be remarkable given the city’s symbolic importance as the focus of Russia’s offensive, and the scale of the losses on both sides there in Europe’s bloodiest infantry battle since World War Two.

On the ground in Ukraine, front lines have largely been frozen since November. Ukraine had looked likely to pull out of Bakhmut weeks ago but decided to fight on.

Zelenskyy had earlier on Thursday continued a tour of front-line provinces, visiting the Kherson region in the south a day after meeting troops near Bakhmut.

A video showed him meeting residents in Posad Pokrovske, a bombed-out village on the former Kherson front line recaptured in Ukraine’s last big advance last year.

Russia invaded Ukraine in February 2022 in what it calls a “special military operation”, saying Ukraine’s ties to the West were a security threat. Since then, tens of thousands of Ukrainian civilians and soldiers on both sides have been killed.

Russia has destroyed Ukrainian cities and set millions of people to flight. It says it has annexed nearly a fifth of Ukraine. Kyiv and the West call the war an unprovoked assault to subdue an independent country.

European Commission President Ursula von der Leyen, said the EU would work to find Ukrainian children deported to Russia and press for their return. She said 16,200 children had been deported and only 300 returned to Ukraine.

The International Criminal Court issued an arrest warrant for Putin a week ago for the forcible removal of Ukrainian children.

“It is a horrible reminder of the darkest times of our history … to deport children. This is a war crime,” von der Leyen said.