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Economics is a dynamic science that changes every minute of the day. Unlike the perception of many people who regard it as a static science with difficult-to-explain laws, economics is related to inflation, fluctuating commodity prices and these are directly connected to people's living standards and moods.
As Turkey is considered one of the economies burdened with high inflation, it would be appropriate to view the Turkish way of dealing with inflation. The Turkish lira would have lost 40-50 per cent of its value in an eye bat, before the procedures by the Turks took force in partially stabilising the currency. These procedures were applied in a bid to restore financial and monitory stability to increase the chances of its merger with the European Union.
A few years ago, when inflation rates reduced salaries and savings, the Turkish Central Bank resorted to swift remedies which resembled theatre acts. It would omit two or three zeros from bank notes. Thus, a one thousand lira bank note would be reduced to a ten lira note bill or a bit more.
A Turkish consumer visiting the market the next day would find an inflation-free marketplace with commodity prices reduced. Goods that had cost 1,000 liras would cost 10 liras.
With the zero-omitting process, Turks would start rearranging their expenditure and start planning for their summer vacations, enjoying the new value of their currency. The surprise is usually wrapped up in the salary received by the consumer, which was usually minus two zeros.
This confusing situation forces the consumer to re-access his finances, waiting for the next time the government decides to omit two zeros to further disguise the inflation.
This phenomenon ended with Turkey's move to a new stage of development and economy, as it strives to be a part of the European Union where modern scientific laws and regulations prevail. The old Turkish method is still in use in underdeveloped countries that have no option but to omit zeros from their currencies to guise inflation.
Inflation today has become a hot issue all around the world. Egypt, last week, was swept with protests because of the increase in the price of fava beans, a cheap basic daily food in the diet of Egyptians. The Egyptian government also decided to hike rice export taxes by 50 per cent in an attempt to curb rice exports.
If the Turkish method is inapplicable today in countries that abide by strict currency and monitory standards, what then, is the solution?
There is no uniform magical remedy for inflation that can be applied successfully to all economies. Furthermore, inflation has become a growing problem in many poor countries that depend mainly on producing agricultural crops. These governments cannot increase salaries or offer big support to many basic commodities.
Therefore, it is important that member countries in economic organisations or councils such as the GCC and the EU to find out reasons behind inflation and specify factors that contributed to its rising rates over its previous rates.
Such studies can also search for methods of relief that suit their economies and assist in overcoming the negative aspects of inflation. After specifying the reason behind inflation, appropriate solutions may be taken to curb it. Such remedies may include the use of good quality substitute commodities, a method which is used in UAE cooperatives.
The Turkish inflation remedy method led to a situation where the Turkish currency was weighed instead of counted during purchase and sale operations in Asia and Africa.
The writer is a UAE economic expert.
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