Wealth in Turkey Grows 157% Despite Soaring Inflation, Topping Global Rankings

Unprecedented Wealth Growth

“Türkiye stands out with a staggering growth of over 157% in wealth per adult between 2022 and 2023, leaving all other nations far behind,” UBS noted, using the local spelling for Turkey. The next-highest countries were Russia and Qatar, each with nearly 20% growth, and South Africa with just over 16%. In contrast, average wealth per adult in the U.S. grew by a modest 2.5%.

Impact of Inflation

Inflation in Turkey currently sits at nearly 72%, significantly affecting the country’s 85 million people, many of whom have experienced a dramatic decline in purchasing power. Over the past five years, the Turkish lira has lost almost 83% of its value against the dollar, now trading at 33 lira to the greenback. Despite this, Turks who own assets like homes have seen their wealth grow as inflation drives up the costs of those holdings.

The UBS report defines net worth or “wealth” as “the value of financial assets plus real assets (principally housing) owned by households, minus their debts.” Samuel Adams, an economist at UBS Global Wealth Management, explained the relationship between inflation and wealth rises in Turkey. He noted that high inflation tends to increase the value of real assets like housing, leading to faster wealth accumulation for those with homeownership or equities.

Currency Effects

The report highlighted the "currency effect," where local currency growth figures for wealth often differ significantly from those in dollar terms. “Türkiye’s already exceptional growth of over 63% in USD more than doubles to nearly 158% in Turkish lira,” the report stated. Japan provided another example, showing less than 2% average growth in wealth per adult in U.S. dollar terms between 2022-23, but 9% growth in local currency.

Long-Term Trends

Evaluating average wealth growth between 2008 and 2023, UBS identified Turkey as having the most dramatic evolution, with average wealth per adult increasing by 1708% in local currency. Paul Donovan, Chief Economist at UBS Global Wealth Management, pointed out that being asset-rich does not necessarily equate to being cash-rich. In Turkey, this discrepancy is evident as the value of assets like homes has soared, but real wages have not kept pace, leading to financial stress for many.

Economic Challenges

The dramatic increase in wealth is juxtaposed with the challenges faced by ordinary Turks. Donovan highlighted that while asset values have increased, the real income for many Turks has declined, creating a situation where people can be asset-rich but cash-poor. This dynamic underscores the complex economic landscape in Turkey, where inflation has significantly impacted living standards.