International view of referendum likely to affect Turkish economy

Dunya Executive - - BUSINESS - Ismet OZKUL Analyst

The historical constitutional referendum, which will change the state and management system in a radical way for Turkey, has had controversial results, with the “yes” vote winning by a hair’s breadth.

Politics in Turkey has now entered a new phase, with new conditions, new balances. This is not only the case for domestic policy. This is also true for foreign policy. The constitutional amendments and referendum results also change the way the world looks at Turkey. The anxiety and criticism that have emerged in recent years has now passed from trend detection to definite qualification.

This change will seriously affect both Turkey’s foreign policy and its economy. First, it is widely accepted that the way the campaign and the vote were conducted were not based on fair, equal and free conditions. There is distrust about the objectivity and independence of the Supreme Election Board. Reports from international observers, such as the Organization for Security and Co-operation in Europe, are significant.

Based on these, the possibility of relations with the European Union reaching a breaking point is no longer seen as impossible. Such a possibility would be a shock to politics and the economy. In addition, uncertainty about the path Turkey will follow on Syria and Iraq have also increased.

These concerns, which are reflected in the comments of effective media, are also taken into consideration in the evaluations of international financial insti- tutions and adopted to a large extent.

As a result, the referendum and the constitutional amendments are factors increasing the external vulnerabilities of Turkey. Such a change in the outlook on Turkey will inevitably affect both portfolio flows and direct investment. This means that the coming period will be more difficult for the economy. The period of volatility in the exchange rate, high interest rates and weak investment appears to be set to continue in the coming period.

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