Turkey’s economic future looks grim
President Erdogan’s and the AKP’s wins in the 2018 presidential and parliamentarian pseudo-elections may turn out to be Pyrrhic victories.
Turkey’s economy is in a critical phase. The growth rates are no longer impressive, the productivity is stagnating, the public and private (enterprises and individuals) debts are rising. The unemployment rate as well as the Turkish inflation are over 10%. The influx of foreign capital is no longer strong. The Turkish lira lost some 40% of its value towards the dollar and the euro, which is critical because many companies and individuals have debts in foreign currencies. The number of bankruptcies is increasing. The rising oil and gas prices are hitting the economy.
Economically, the Kemalist CHP with its presidential candidate Ince did not really offer a credible alternative to Erdogan and the AKP. The CHP promised even more state interventions, higher minimal wages and interest-free credits to small and midsize enterprises. That is not what Turkey with its rising public and private debt and its overheating economy with high inflation and high interest rates needs.
According to the Turkish statistical bureau, the country’s GDP rose by 7.4% in the first three months of 2018. However, the inflation rate was around 12% in May, the central bank was forced to increase the interest rate to 17.75%. These are signs of overheating and economic imbalances.
Had the opposition won the 2018 parliamentary and presidential elections, they would soon be blamed for the current and future economic mess, paving the way for a quick return of both Erdogan and the AKP. Now, with Erdogan and his party fully in charge of everything, the will hopefully take all the blame. The 2018 wins may quickly turn out to be Pyrrhic victories.
View of Istanbul. Hagia Sophia, Sultanahmed Mosque. Photo: Bild: Julian Nyča / Julian Nitzsche, CC-BY-SA 3.0 / Wikipedia / Wikimedia.
