Apple briefly stopped selling its products in Turkey, but why?

Apple products, especially iPhones, are known to enjoy fanfare across the globe. People wait in serpentine queues for long hours just to get their hands on the new gadgets, no matter how expensive they are.

Prices of Apple electronics, including iPhones, vary around the world. Import duty, among other taxes, levied by the countries make these products costlier.

But despite the steep price charged by the US-based tech behemoth, the demand for Apple products continue to soar.

Among the countries where Apple products cost more include Turkey.

According to web analytics platform Statcounter, as of November 2021, Apple’s market share in Turkey was around 16.67 per cent. In the previous year of the same month, the market share hovered around 15.58 per cent

Even though Samsung still rules the roost, Apple has been steadily gaining its market share in the transcontinental country.

But on November 24, Apple stopped the online sale of its products, ranging from iPhones to Macs, in Turkey.

Though the Turkish consumers were able to browse through Apple online store, they were unable to add products to their cart and instead were greeted with this message: “Not currently available”.

The reason for this is the monetary policy adopted by President Recep Tayyip Erdogan, which has resulted in the country’s currency, the lira, to crash as much as 45 per cent this year.

Volatile currency

Turkey’s currency has been plunging to all-time lows against the US dollar and the euro in recent months.

Lira has lost more than 45 per cent of its value against the dollar this year. In November alone, the Turkish currency lost nearly 30 per cent of its value against the dollar.

In 2019, 1 US dollar was equal to 5.53 Turkish lira. But in November 2021, the lira fell to 13.10 against 1 US dollar.

The sharp devaluation of the Turkish lira and the resultant high inflation forced Apple to halt sales from its Turkish website temporarily. 

As the currency had been falling over 40 per cent, the tech company had to adjust the prices of its products in order to extract the value of the original amount.

And on November 26, the US tech giant resumed its sales in Turkey and hiked the prices of its products between 25 per cent to 40 per cent.

The currency’s freefall is triggering a cascade of problems for the nation’s economy even as Erdogan presses ahead with a widely criticized effort to cut interest rates despite surging consumer prices.

The crash in the currency is the result of the country’s central bank cutting borrowing costs by 4 percentage points since September, in line with Erdogan’s wishes, even though inflation accelerated to around 20 per cent.

Erdogan, who has been at the helm of affairs for 19 years, has long argued that high interest rates cause inflation, contrary to general principles of economics.

Mainstream economics holds that lower interest rates lead to higher inflation because when money is cheaper to borrow, it loses its value relative to other currencies, and encourages consumers to spend more and businesses to produce more.

Rising cost of living

With inflation running at more than 21%, according to official figures, the prices of basic goods have soared and many people in the country of more than 83 million are struggling to make ends meet.

But the Turkish president has been pushing for low borrowing costs to stimulate the economy, boost growth and exports, and create jobs.

He has vowed to break the cycle of an economy dependent on short-term “hot money” lured by high interest rates.

A devout Muslim, whose religion regards usury and charging interest as a sin, Erdogan describes interest rates as “the mother and father of all evil.”

Recently, he had fired three central bank governors who resisted lowering rates.

The Turkish leader has blamed the currency crash on foreign forces bent on destroying Turkey’s economy and says his government is waging “an economic war of independence.”