Why Financial Well-Being should be a Core KPI in Emerging Economies with a Focus on Türkiye
Financial well-being is the degree to which households can meet current obligations, absorb shocks, and pursue goals with confidence. It translates macro trends into lived realities: whether families can pay bills, smooth consumption, and avoid distress borrowing. In emerging economies, where macro volatility and structural frictions are greater, monitoring financial well-being is not a “nice to have”; it is a first-order decision variable for policy and strategy.
What makes emerging economies structurally exposed
- Higher inflation volatility. Headline prices swing more, eroding purchasing power and complicating planning for households and firms.
- Informal labor markets. A large share of workers operate outside formal protections mechanisms, heightening income instability and exposure to shocks. Globally, roughly six in ten workers are in the informal economy, an acute reality across many emerging markets.
- Limited financial safety nets. Social protection coverage remains incomplete; the ILO estimates billions remain unprotected, leaving households with thin buffers against income or price shocks.
- Dependency on foreign capital. External financing conditions can shift abruptly, transmitting through exchange rates, funding costs, and balance sheets. Assessments flag persistent vulnerabilities and capital-flow risks for emerging markets, including Türkiye.
- Household debt vulnerabilities. Rapid growth in consumer credit, especially revolving credit, can mask fragility until rates rise or incomes stall, amplifying downturns.
Türkiye: the household lens behind the macro headlines
Türkiye’s experience is instructive. After successive inflation waves, annual CPI was still 32.95% in August 2025 with a monthly rise of 2.04%. The aggregate number signals progress from prior peaks but also quantifies ongoing purchasing-power pressure for households. (TurkStat)
Policy normalization since mid-2023 has helped reduce crisis risks and anchor disinflation expectations. Yet international surveillance notes that external and domestic vulnerabilities persist—meaning household resilience remains a binding constraint for growth quality. (IMF Country Page)
Meanwhile, the composition of household finance has shifted. With loan rates high, card usage expanded as a de-facto liquidity tool. As of early September 2025, consumer loans plus credit cards reached roughly ₺5.0 trillion, underlining the scale of household leverage exposed to income and price shocks. (Banking Regulation and Supervision Agency of Türkiye)
Market reporting and payments data further indicate widespread reliance on credit cards for everyday purchases both a resilience mechanism and a risk amplifier when incomes lag or fees and rates rise.
Türkiye is not an outlier: the pattern across other EMs
Across Latin America, inflation dynamics have been volatile. Argentina’s annual inflation, while far below 2023 highs, registered 33.6% year-over-year in August 2025, illustrating how inflation shocks leave long tails in household budgets. (INDEC Argentina)
In Southeast Asia, inflation has generally moderated, yet the variance across time and countries underscores planning uncertainty. The Philippines’ August 2025 headline inflation printed 1.5%, a reminder that even low-inflation regimes can swing meaningfully across cycles. (Philippine Statistics Authority)
Layering in capital-flow cyclicality, with EM portfolio inflows and outflows that respond rapidly to global risk sentiment, domestic conditions can tighten quickly and have immediate consequences for household liquidity and spending.
Why financial well-being monitoring is urgent
Bottom line
Macroeconomic statistics tell us whether economies are producing more and stabilizing. Financial well-being tells us whether households can participate in that growth and withstand shocks. In Türkiye, and across emerging markets where inflation, informality, safety-net gaps, foreign-capital dependence, and household leverage intersect, systematic household-level monitoring is essential to de-risk policy and unlock sustainable, inclusive growth.