The Truth Behind Turkey's Exchange Rate Fluctuations: The Distortion of Per Capita GDP Data in 2025

Six years ago, in 2019, I wrote that China’s per capita GDP first surpassed $10,000, approaching countries like Russia, Brazil, Mexico, Turkey, and Malaysia, and predicted that China’s infrastructure and living standards would gradually widen the gap. However, actual data in 2025 completely invalidated that judgment. The latest figures show that China not only failed to surpass these countries but was actually overtaken in per capita GDP by several key economies. The real reasons behind this are far more worth paying attention to than the data itself.

Comparing Per Capita GDP of Six Countries: Why Turkey Overtook China

Based on World Bank statistics from 2018 to 2024, and the latest actual data released in 2025, the trend of per capita GDP among these six countries presents an unexpected pattern.

Using an average exchange rate of 7.1429 RMB to USD in 2025, China’s per capita GDP reached $13,953. In comparison, Turkey’s was $18,529, Russia $17,445, Mexico $12,931, Malaysia $12,853, and Brazil only $10,355. Over six years, the growth rates are quite telling: Turkey doubled from $9,395 in 2019 to $18,529 in 2025, nearly a 100% increase; Russia grew by 50%; China only increased by 34%; Mexico and Malaysia saw limited growth, and Brazil had slight growth.

On the surface, China not only failed to lead these countries in per capita GDP but was significantly surpassed by Turkey. But can these data truly reflect the actual economic development gaps?

The Mystery of Turkey’s Exchange Rate: “Reverse Appreciation” Under High Inflation

The extraordinary rise in Turkey’s per capita GDP hides a complex economic phenomenon. The country has experienced extreme hyperinflation, with annual inflation rates between 35% and 60%, driving nominal GDP to grow at over 45% annually. Normally, such high inflation should cause the Turkish lira to depreciate rapidly, but the reality is surprising—by implementing interest rates above 40%, the Turkish government has successfully maintained a relatively stable exchange rate.

This “counterproductive” policy works on the logic of: high interest rates attract foreign capital seeking high returns, which creates demand for the lira and offsets the depreciation pressure caused by inflation. The result is a bizarre situation—domestic inflation worsens, the currency’s credibility plummets, but when measured in USD, per capita GDP appears to rise sharply.

From another perspective, Turkey received 53.7 million tourists in 2024, a 35% increase, and service exports in USD also benefited from exchange rate stability, contributing to the nominal GDP boost. However, the sustainability of this economic model is questionable— the lira has become a nearly untrusted store of value; even with 40% interest, citizens remain fearful of holding it.

The Illusion and Reality of Exchange Rates and Nominal GDP

Russia provides another example. As a resource-exporting country, its economy heavily depends on oil and gas revenues. Domestic inflation pushes up the nominal GDP in local currency, but the exchange rate remains relatively stable due to export income support. This results in a “phantom appreciation” of the ruble— the exchange rate is decoupled from the country’s real purchasing power. The foreign currency inflows support the exchange rate, but this does not mean the domestic economy is healthy; the long-term trend of continuous currency depreciation cannot be changed.

The strange patterns in Turkey and Russia are not isolated. The U.S. also exhibits similar features: nominal GDP has grown significantly, with per capita GDP approaching $90,000, a 37% increase since 2019, surpassing China’s 34% growth. While the dollar remains the global reserve currency, its credibility has been eroding rapidly in recent years.

Global Currency Policy Distortions: The Credibility Crisis of Per Capita GDP Data

In recent years, many countries have adopted similar “nominal GDP growth strategies”: high inflation to inflate nominal GDP in local currency, combined with interest rate hikes and exchange rate controls to prevent sharp depreciation, ultimately leading to artificially inflated USD-based per capita GDP.

The consequences of this global phenomenon are becoming evident: the credibility of the currency system is in crisis. The Turkish lira’s credibility has been completely shattered, and the Russian ruble can only serve as a settlement tool—people buy goods immediately to avoid depreciation. The dollar, though still dominant, is also losing credibility at an accelerated pace. One manifestation of this crisis is the continuous surge in gold and silver prices—central banks and investors are turning to precious metals to hedge currency risks.

Reflection and Outlook

Although my 2019 prediction about China’s per capita GDP growth ultimately fell short—China did not outpace Russia, Brazil, Mexico, Turkey, and Malaysia, and instead fell behind the U.S.—this does not indicate China’s economic decline. Instead, it reflects the distortions in the global monetary policy system. The real issue is not China but some abnormal countries manipulating their currencies to artificially inflate their data.

Turkey’s extreme exchange rate policies, Russia’s resource dependence causing currency illusions, and the U.S. dollar’s devaluation creating growth illusions all point to the same reality: in the current global monetary environment, the per capita GDP indicator has become partly ineffective. These unconventional monetary policies will eventually cause problems—when exchange rates adjust and inflation subsides, the artificially inflated per capita GDP will revert to reality. True economic competitiveness still depends on solid infrastructure, technological innovation, and human capital—tangible indicators of real strength.