Analysis-Erdogan’s Turkish economic miracle began to fail Reuters

By Jonathan Spicer

ISTANBUL (Reuters) – Five years after President Tayyip Erdogan witnessed a coup, the possibility of extending his rule to a third decade may depend on a reversal of the economic downturn that has seen Turkish prosperity https://tmsnrt.rs/ 2TaYZu5, equality https: // tmsnrt .rs / 3jhqMnU and employment https://tmsnrt.rs/3x6AXj1 have been falling since 2013.

Erdogan has elections in 2023 – the centenary of the Republic of Turkey. Surveys show that over the past three years the currency crisis, a sharp recession and the coronavirus pandemic have fallen to its aid.

Some show a ruling coalition behind an informal opposition alliance, although Erdogan’s AK Party (AKP) remains well-known, with a strong base among rural and working-class conservatives.

This year, economic growth has slowed back when Turkey was one of the only countries to avoid a contraction in 2020. But the damage in recent years has led to a return to inflation of 20% or more of food and other basic goods.

“If you look at the economic valuation of President Erdogan’s polls along with the difficulties, it is quite difficult for the conditions to think that elections are beneficial in the next 12 months,” said Douglas Winslow, director of European sovereignty at Fitch Ratings. .

According to the World Bank, last year more than 1.5 million Turks fell below the poverty line.

The Gini index of income and wealth distribution shows that inequality has increased since 2011 and accelerated since 2013, eliminating the large gains made in 2006-2010, during Erdogan’s first decade in power.

To see the difference index, see: https://tmsnrt.rs/3jhqMnU

See GDP per capita: https://tmsnrt.rs/2TaYZu5

A Decade of Hospitality

Erdogan’s AKP baby was the longest-serving servant in modern Turkey in power in 2002, after the worst decline since the 1970s, when Turkey was frustrated by its mismanagement and promised to break the recession.

Erdogan then took advantage of the economic bounce and diplomatic pivot of the prime minister to achieve a decade of prosperity for the West.

Poverty and unemployment sank. A decade earlier, triple-digit inflation touched 5%, increasing the Turkish lira’s attractiveness to locals and foreigners.

Erdogan seemed untouchable.

Things started to change in 2013, when unprecedented anti-government protests dominated Turkey and emerging world markets suffered a painful financial exodus as larger economies grew.

Reuters analysis showed that the year marked a turning point in per capita GDP, unemployment and other economic welfare measures.

2013 was also the highest watermark for foreign investment https://tmsnrt.rs/3dYGn8i, according to official bond statistics and Turkish data monitors. Https://tmsnrt.rs/36ehjWv the value of the pound has since plunged, frustrating the global purchasing power of the Turks.

To view holdings for foreign investors: https://tmsnrt.rs/3dYGn8i

See Unemployment: https://tmsnrt.rs/3x6AXj1

REDUCTION AND ISOLATION

Erdogan was greatly surprised when his government canceled the 2013 protests that began in Istanbul’s Gezi Park.

The crackdown “crystallized the AKP as a new establishment and showed that the popular tide was turning against them,” said Ates Altinord, an assistant professor of sociology at Sabes University.

The coup attempt on July 15, 2016 caused a severe state of emergency, and analysts say it pushed the economic well-being of the Turks further south.

“Since 2013, the AKP and Erdogan have been on the rise of authoritarianism, which is likely to hurt the economy in different ways,” Altinord said.

“They went into a more isolated and centralized way of making decisions, with less freedom of the media. So you will probably end up making more political mistakes, you will lose your response and there is much more room for corruption.”

VOTING BASIS

After a dramatic improvement since Erdogan took office in 2003, other key measures are strong.

When the austerity imposed by an International Monetary Fund program in 2001-2 was eased, Erdogan adopted the free market policies needed to join the European Union – then the main goal of the AKP.

The 2008-9 global financial crisis hit Turkey, but it also brought investors ’rush to seek returns in new markets.

Cheap foreign credit has fueled the economic boom driven by construction, which has led the AKP to win eight national elections in a row.

Erdogan has “a base of adoring and loyal supporters (because citizens for the most part in the twentieth century had better living standards than Kemalists”), Soner Cagaptay wrote in a report at The Washington Institute.

He noted that the death rate of Turkish children before Erdogan came to power was comparable to that of the pre-Syrian war, and is now similar to that of Spain.

ECONOMIC AND POLITICAL INKS

But other welfare measures began to crumble in 2013 when the US Federal Reserve suggested that they could start removing stimuli from absorbing funds from emerging markets.

Political tensions escalated from then on when Erdogan turned to nationalist allies, and later won a referendum to approve a presidential system that concentrated power in his palace.

Some important economic authorities opposed the acquisition of power by the AKP. Analysts say it has begun to create success in its policies, including pressure on the central bank to lower interest rates, even as the lira entered a crisis in 2018.

The currency has dropped 75% of its value against the dollar since 2013, more than half in the last three years. Many Turks now choose to store wealth in foreign currency.

“As for the political side, it is felt that since 2013, Turkey and the West have been moving away,” said Roger Kelly, regional economist at the European Bank for Reconstruction and Development.

“Yes, we have worsened since 2013. But we need to see it in the context of the positive steps that have taken place before.”

For currency amortization, see: https://tmsnrt.rs/36ehjWv