Turkey, once the “affordable shopping paradise of Europe and Asia,” is now facing a tourism slump due to 75% inflation in June. Luxury goods prices have skyrocketed, like Hermes scarves at €850 (€490 in Paris) and Levi’s jeans at $120 ($59.90 in the US), deterring tourists.
The high cost of living is hitting locals hard. Tomatoes are up 214% annually, costing the minimum hourly wage per kg. Taxi fares in Istanbul have soared, and there are shortages of common antibiotics.
Economically, Turkey grapples with a triple crisis: a 40% lira drop against the dollar this year, 90% rise in auto parts import prices, and ineffective 50% interest rate hikes. As a result, 78% of families cut meat, and 35% of young people consider emigrating.
The tourism industry is suffering. Western European visitor share has fallen from 45% in 2019 to 22%, and four – star hotel occupancy is below 60%. In border areas, over 3,000 cars weekly cross to Bulgaria for shopping.
In response, President Erdogan announced a 18% VAT refund for tourists on over – 500 – euro purchases and suspended a 30% tax on imported cosmetics. But Fitch warns inflation could hit 130% in 2024 if not curbed.
On Independence Street, shops close early as tourists only take pictures. Turkey also faces price inversion in cotton textiles, a rise in alternative destinations, and a 170% surge in underground bank transactions. Turkish Airlines adding low – cost routes signals local consumption power outflow, with tourism’s GDP share down from 12% to 8.7%.
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