Brittle economy risk for Erdogan ahead of poll
‘Turkey’s wealth fund could buy foreign brand or bank’
ANKARA, April 15, (Agencies): At rallies ahead of Sunday’s referendum on expanding his powers, Turkish President Recep Tayyip Erdogan is fond of reciting the economic achievements of his one-and-a-half decades in power.
High growth rates of up to nine percent, a stream of foreign investment, ambitious infrastructure projects and precious stability that followed the near financial meltdown of its 2000-01 crisis.
“We did this,” the president says proudly.
But the country’s referendum on whether to agree a presidential system is taking place against the background of the first sustained signs of weakness in the Turkish economy.
What has so far proved a pillar of strength for Erdogan and the ruling Justice and Development Party (AKP) could prove to be an Achilles heel, economists say.
Atilla Yesilada, Turkey specialist at Global Source Partners, said the weakness had added to uncertainty among some of the AKP’s traditional electorate. “AKP’s base is Islamist and conservative, but they are also small business owners” and current economic policy is “not good for business”, the analyst told AFP.
A Turkish economist who spoke to AFP on condition of anonymity said the weak economy was “already hurting” Erdogan and the ‘Yes’ campaign. The economist said “winning this referendum should have been very easy” for the AKP given that in November 2015 parliamentary polls it and its allies in the Nationalist Movement Party (MHP) won a combined 62 percent of the vote.
“That the polls are still extremely tight shows — at least to some extent — the impact the weak economy has,” the economist added.
Last month inflation hit 11.3 percent — a level unmatched since October 2008 — while unemployment was 10.9 percent in 2016. Youth unemployment was even worse at 19.6 percent. The Turkish lira has lost nearly four percent of its value against the US dollar since the start of the year, the worst performing emerging markets currency so far.
Yet the Turkish economy is still showing signs of the resilience that became its trademark over past years.
The Istanbul stock market has rallied this year, climbing 15.3 percent since January and reached two-month highs on Tuesday.
In 2016, a year marked by the failed July 15 coup, the Turkish economy grew by a robust 2.9 percent, beating analysts’ expectations.
The presence of almost three million Syrian refugees and aggressive measures by the government to raise consumption have also helped provide a boost.
However growth is already much lower than the rates seen before 2011 and clouded by uncertainty over a complex restatement of the GDP statistics that has bewildered some observers.
The government has blamed the weak economy on investors’ ‘waitand-see’ attitude ahead of the vote and reassured citizens that growth will improve. The tourism industry, with revenues that account for almost five percent of Turkey’s GDP, has come under heavy strain with many visitors staying away.
After bitter tensions with the European Union in the referendum campaign and doubts over the future of Turkey’s EU bid, there is also concern over the future of European investment. Yesilada warned that “all our indicators show that EU companies are becoming extremely cold towards Turkey”.
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ANKARA: Turkey’s new sovereign wealth fund could purchase a brand or a bank abroad, an adviser to President Tayyip Erdogan said on Friday, adding that the fund would start operations after its three-year strategy is announced.
Speaking in an interview with state broadcaster TRT, adviser Cemil Ertem said the fund may make purchases on Turkey’s bourse. The government has already transferred billions of dollars in stakes of Turkish Airlines, major banks and other companies to the fund to finance big-ticket infrastructure projects.
Ertem also said he expected inflation to fall rapidly from the second half of 2017, after annual inflation hit its highest in 8-1/2 years in March as chronic weakness in the lira currency stoked a surge in consumer prices.