Mahfi Eğilmez explained: The economy is growing, why are citizens becoming poorer?

In his article published on his blog, economist Mahfi Eğilmez discussed the difference between economic growth data in Turkey and the economic conditions experienced by citizens in daily life. Noting that many people have difficulty meeting their basic needs despite the increase in national income and GDP, Eğilmez evaluated the reasons for the situation.

Emphasizing that growth and increase in social welfare do not mean the same thing, Eğilmez pointed out that many factors determine daily life, from production amount to price increases, from exchange rate to income distribution.

DIFFERENCE BETWEEN CURRENT PRICES AND REAL GROWTH

According to TUIK's 2025 data, the Turkish economy grew by 41.6 percent in current prices, while real growth was 3.7 percent. Eğilmez pointed out that an increase in monetary size does not mean the same thing as an increase in production amount.

INFLATION ERROSES PURCHASING POWER

Even though nominal incomes increase, the faster prices rise reduces the purchasing power of citizens. For example, when the expenses of a person whose income increases by 30 percent increase by 50 percent, his real purchasing power declines.

COST OF LIVING DOES NOT AFFECT EVERYONE THE SAME

Eğilmez emphasized that the impact of inflation on households varies. Citizens, who spend most of their income on rent, food, energy and transportation, are more affected by price increases in basic needs. For this reason, average inflation may not fully reflect the cost of living experienced by everyone.

THE EFFECT OF PRICES ON THE SERVICE SECTOR

Eğilmez stated that some of the growth in areas such as trade, tourism and digital services could be due to price increases. He emphasized that the increase in nominal incomes does not always mean the same increase in production and added value.

NATIONAL INCOME INCREASE IN DOLLAR BASIS IS NOT AN INDICATOR OF WELFARE

According to Eğilmez, a faster increase in nominal GDP in Turkish Lira than the increase in the exchange rate can ensure that national income grows in dollar terms. However, this increase alone does not reveal an increase in real production or an improvement in the welfare level of citizens.

HOW ARE THE RETURNS FROM GROWTH DISTRIBUTED?

Eğilmez stated that GDP shows the total added value created in the economy, but does not reflect how income is distributed among different segments of society. Wages falling behind price increases can lead to a decrease in the purchasing power of citizens and a weakening of their economic security despite economic growth.

'IT'S NOT JUST HOW MUCH WE GROW THAT MATTERS'

According to Eğilmez, increasing GDP in Turkey does not mean that the welfare of citizens has increased to the same extent. Inflation's erosion of purchasing power, changes in exchange rates and inequalities in income distribution can cause economic growth to have a limited reflection on daily life.

Eğilmez pointed out that the success of the economy should be evaluated not only by the growth rate, but also by the extent to which growth is reflected in real incomes and living standards.