Shatha Khalil *
Despite the violent unrest in the Turkish situation after the attempted coup against President Recep Tayyip Erdogan in 2016, the economic situation deteriorated, but the Turkish government was able to remedy it quickly, to achieve great economic growth in the same year.
According to the Organization for Economic co-operation and development (OECD) “the Der Spiegel newspaper reported that the government has attracted many foreign investments, which have provided billions to the state treasury, but the unemployment problem has been a main concern for the Turkish government. Turkey has experienced remarkable population growth due to high birth rates, low mortality rates, The unemployment rate remained at 10 percent, and did not fall, despite the country’s economic boom.
The newspaper added: The Turkish lira lost 4 percent against the euro, and in 12 months the lira lost 30 percent, and its value has risen significantly over the past 10 years, due to major economic reforms by Erdogan’s government which has resulted in considerable popular support for the Justice and Development Party (AKP), especially in light of its successful economic plan.
The representatives of economic sector in Turkey and abroad praised its economic policy, which clearly supports the culture of the revival of trade, and the newspaper stresses that the Turkish economy has maintained its prosperity, despite the exposure of several strong shocks, especially during the global economic crisis in 2008-2009, and this due to the AKP’s successful plans to reduce huge inflation rates, which amounted to 80%.
The newspaper pointed out: Turkey has benefited greatly from its demographic transition where the population has been tripled to reach 80 million, compared to 28 million in 1960. The population has grown since 2002 to about 14 million. As a result, the proportion of labor in the country and the number of consumers in the Turkish market has increased.
As Turkey’s rapid economic growth is offset by a large population increase, and despite experts’ assurances that Turkey has been successful in saving millions of jobs, unemployment remains unchanged .The positive relationship between population growth and economic growth has stabilized per capita from the GNP.
The economic expert of Turkish origin, Darun Assem oglu, stressed that an important factor behind the economic recovery is the existence of institutions that follow an independent economic policy as a result of the radical economic reforms imposed by the International Monetary Fund on Turkey after one of the suffocating crises.
In a related context, Asim Oglu called for the establishment of independent bodies to oversee the banking, telecommunications and energy sector, stressing that the real reform began with the achievement of independence of the Central Bank since 2001
The newspaper added that many economic institutions have been under political influence in the past. For example, the central bank has taken no action against inflation, which has risen 12%.
The interest rate hike will not only halt rising prices, but will also increase growth rates, which in turn will ensure Erdogan’s re-election in 2019.
The IMF forecasts for the growth of the Turkish economy, issued in October 2017, have set a ceiling for growth at 5.2%, but the growth rate exceeded those expectations, ranking first among the G20, with growth rate of 7.4% by the end of 2017 , Turkey’s GDP at the same date was $ 776 billion . With regard to Turkey’s high growth rate, and in light of this data for the 2017 GDP increase compared to 2016, per capita from GDP in Turkey rose by the end of 2017 to $ 9.6 thousand Compared with $ 8.1 thousand in 2016.
The Turkish tourism achieved positive returns by the end of 2017, amounting to 26.2 billion dollars, an increase of 18.9% than in 2016, and the year 2017 marked a tourism without bombings or attacks in Istanbul or other cities, as before.
Foreign direct investment reached $ 7.4 billion by the end of 2017, compared with $ 12.3 billion in 2016.
Commodity exports witnessed a positive development over the past period, as they benefited from the devaluation of the Turkish currency by increasing exports due to Turkey’s flexible production base, which was able to increase its production to cope with the high demand due to the devaluation of the currency.
According to data from the Turkish Statistical Institute, the performance of Turkish commodity exports in February 2018 amounted to 13.1 billion dollars, representing a 9% increase compared to the performance of commodity exports in February 2017, where the value of exports was 12 billion dollars.
After Erdogan’s decision to hold early presidential and parliamentary elections in the country on June 24, 2018 instead of November 2019, there was a state of optimism in the Turkish economic circles as economic analysts confirmed that the early election decision in Turkey is a positive step for the Turkish economy to help it overcome Many of the challenges they face because of the foggy political landscape.
Erdogan’s decision came after a meeting with the leader of the opposition Nationalist Movement Dulut Bhagli against the backdrop of the latter’s request for early elections on the next August 26, commemorating the Battle of Malakirid in 1071, when the Seljuk Turks defeated the Byzantine Empire and captured Emperor Romanus IV, Turkey’s enemies are taught a lesson, according to Bhagli.
Some economic analysts predict that the Turkish economy will witness more stability and remove any doubts in implementing its vision for Turkey 2023, based on the expectation that the AKP will win parliamentary and presidential elections.
The current challenges will be the problems of falling unemployment and inflation rate below 10% and improving the position of the Turkish currency against foreign currencies, although the depreciation of the currency is now in line with the trends of the US-China economic conflict and waving that the currencies are entering into the instruments of conflict.
Empowering justice and development could lead to a monetary policy towards the exchange rate “at a price equivalent of at least 3.5 Lira per dollar” and no more than 3.65, which remained stable during 2017.
The decline of the Turkish currency is due to political factors, such as Turkey’s entry into direct war in both Syria and Iraq to protect its borders from violent groups and projects of some external forces seeking the existence of a Kurdish state on the Turkish border as a pressure on the Turkish state and change the map of regional forces in the region.
One of the expected outcomes is the continuation of the policy of justice and development towards the fortunes of parallel organization, and the disclosure of political money both from within and from abroad, which plays some roles in secret against the Justice and Development Project.
Erdogan pledged after the presidential and parliamentary elections scheduled for June 24:
– Lower interest rates, inflation and current account deficit, reduce borrowing costs to stimulate loan growth and support the Turkish economy.
– Lowering inflation, interest rates and current account deficits, Turkey’s economy will be better able to withstand external shocks and financial attacks, and will increase Turkey’s attractiveness to investment.
Data showed that inflation in Turkey rose to about 11% in April this year, while the current account deficit reached 4.152 billion dollars in February, and analysts believe that the Turkish central bank raised the key interest rate in April – 2018, more than expected by 75 points Basis, needs to do more to fight inflation and support the Turkish currency against the dollar.
Turkish Economy Minister Nihad Zibekji said the country’s economy is capable of exceeding its 2018 growth forecast and has grown by 7.4 percent this year, ranking first among the G20 economies, accounting for 85 percent of the world economy.
Economic Studies Unit
Rawabet Center for Research and Strategic Studies