Turkey’s troubled economy awaits forthcoming referendum result for reaction

Alwaght– Turkish President Recep Tayyip Erdogan in a speech has promised prosperous economic conditions once the upcoming referendum gets the approval of the public and leads to constitutional reforms.

Erdogan’s pledge is coming while the preparations are going ahead to see holding the highly divisive and controversial Turkish poll on constitutional reforms on April 16 which, if accepted, will transform the country’s political system from parliamentary to presidential.

The Turkish president’s comments on recovered economy, the analysts say, are good evidences that the country’s economy is living its tough time. The situation even worsened after Ankara leaders got the country engaged in military campaign against the Kurds, majorly Ankara’s archenemy Kurdistan Workers’ Party (PKK), and then an intervention in the neighboring Syria’s north.

Many economists cast doubts on the veracity of Erdogan’s claims that the country’s economy will recover if the nation votes yes to the constitutional changes that will initially solidify Erdogan’s powers as the president.

Turkey’s leading trading and financial partner is the European Union, with half of the Turkish exports and imports respectively going to and coming from the EU member states.

But it does not seem that the Turkish leader pays much attention to the large volume of Turkish-European economic interactions. He recently labelled Europe the “rotting continent.” He added that the Europeans know that and try to cover that up through xenophobic behaviors and also through staging hostility against the Turks and the Muslims.

The experts suggest that this form of Erdogan’s talk indicates that he more puts premium on the security and political matters at home than economic ties with the foreign sides. They add that this is why his pledge of post-referendum economic recovery is not that much reliable as he in many cases, especially recently, sacrifices the economic interests coming from relations with the EU to the security and political tensions between Ankara and the 28-nation bloc.

The Turkish economy, according to the outcoming statistics, has seen a 2.9 percent growth rate, proving lower even than the year before, and also indicating that Ankara leaders are facing a persistently weakening economy. The economists say that in the new year it is not unlikely that the country’s economy will experience even lower growth rate.

The pro-government media, however, are displaying a brightly positive picture of the national economy’s status. But the reports of these media, predominantly state-funded, are questioned by the economists’ comments. Necip Baghauglu, an economist at the German Trade Invest, has expressed his negative opinion about Turkey’s economic status. According to him, the unemployment rate of Turkey during the past three years has jumped up 3 percent, now hitting the 13 percent. He also noted that the inflation rate is 11.33 percent, continuing that from last year’s summer up to now, the Lira, the country’s national currency, has lost one third of its value against foreign currencies.

These figures, however, are rejected by the government. It regularly publishes the economic growth reports based on its own, and not the universal, economic standards.

Ankara government has taken a set of measures toward economic improvement, including a decision by the central bank to keep the interest rates low. But, on the other hand, the dropping value of the currency has made the imports costly for Turkey. The rising price of imported wares is not limited to the end-user goods. Producers also feel the pinch, as many of them rely on imports for their production operations.

Baghauglu also said “many in the country are proud to see the Turkish car industry thriving and prosperous. But if we see the issue, we find out that roughly 60 percent of the car parts come to the national car makers from abroad. The high tech-based parts like the engine, the gear box and others are not produced in Turkey. Now we can see where the problem is.”

Furthermore, Erdogan’s policies as well as last year’s terrorist attacks in the country have motivated the foreign tourists, particularly the Europeans, to avoid travelling to Turkey. The emerging reports show that the Turkish tourism industry has suffered resounding damages, and now many jobs of citizens are facing the jeopardy of being lost.

The state statistics office has reported $9.5 billion loss the tourism sector sustained in 2016, dropping to $22.1 billion per year. The same office also announced that last year a total number of 311 million tourists, including the Turks living abroad, visited Turkey. This number was 422 million in 2015.

Four months ago, Reza Hakan Tekin, the Turkish ambassador to Iran, said that the number of the Iranian tourists travelling to Turkey last year saw 30 percent shrinkage in comparison to 2015.

“We do not have certain figures but up to October 2016, we observed a 30 percent drop of Iranians’ visits to Turkey, and this causes some concerns for us”, Tekin told Iran Students’ News Agency (ISNA).

The last July’s failed military coup against the government as well as ISIS terrorist group’s attacks on the one hand and the Kurdish opponents on the other hand have well cast a shadow over the country’s tourism which stands as a significant sector of the national economy. It accounts for nearly 5 percent of the Gross Domestic Production (GDP) and its decline considerably contributes to negative economic growth rates.

The International Monetary Fund (IMF) has lately reported that the shrinking tourist arrivals to Turkey forced down the country’s GDP by 1 percent in 2016.

The troubled economic situation in Turkey is coincided with the forthcoming decisive referendum that will possibly transform the country’s political future, and particularly the ruling Justice and Development Party’s, led by president Erdogan.

It is for significance of this poll that Erdogan said he will work toward economic transformation should the nation gives green light to the political and constitutional reforms. The analysts, however, say the promise might not be that viable even after pro-reforms vote, since his past records show he prioritizes politics and regional adventures rather than focusing on the economic improvement.