Page 44 - bne_Magazine_February_2019

44 I Outlooks 2019 bne February 2019
Turkey Outlook 2019
bne IntelliNews
Turkey’s dream of becoming a trillion-dollar economy has gone up in smoke – at least for the foreseeable future. Last year’s severe currency crisis sparked spreading economic turmoil and appears to have delivered a mean recession. President Recep Tayyip Erdogan and his Justice and Development Party (AKP) will step up campaigning for the upcoming March 31 local elections attempting to avoid sheepish acknowledgement that the growth party is over. The Interna- tional Monetary Fund (IMF) expects Turkey’s nominal GDP to come in at $631bn for 2019. That would mean the country retaining its position as having the world’s 17th largest economy, but the anticipated output figure pales
in comparison to 2017’s $849.5bn.
The Erdogan administration must be keenly aware that a wheel has come off. Consumers have been rocked by the hard landing. So how will the populist president (Turkey’s first near-all-powerful “executive presi- dent” since his June 2018 re-election was secured and triggered consti- tutional changes) keep a majority of the electorate on his side as he approaches two decades at the top?
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Erdogan's 2023 vision promoted back in 2011. How many of its goals will survive the economic mire Turkey finds itself in?
Erdogan’s popularity sinking
Opinion polling is rather unreliable
in Turkey but there are enough point- ers to conclude that there is a good
case Erdogan’s popularity with voters has sunk below 40%. But Erdogan is a master at pressing the right buttons with Turkish constituencies, opportunistically appealing to nationalist instincts when advisable such as by blaming Turkey’s economic woes on “foreign plots” or whipping up sentiment around Turkish military adventures chasing Kurdish “terrorists” in Syria and Iraq. Expect more of that as the polling date nears. And, despite the pressing economic imperatives, don’t count on Ankara
to run the tightest of fiscal, or even monetary, ships in the first quarter.
In late November, it became clear that a pre-election stimulus fest was get- ting under way. Erdogan announced Turkey was to launch a fresh invest- ment and employment mobilisation campaign. Among other measures, Turkish lira (TRY) 734mn ($139mn) was allocated for 2,545 small and
medium sized enterprises (SMEs) to create 6,055 new employment open- ings. Adding to the campaign season generosity, December 31 brought reports that officials are lining up a 10% discount on 2019 gas and electricity prices for households and businesses.
The government, meanwhile, has been encouraging local lenders to “volun- tarily” cut lending rates and private businesses to slash prices under the government’s “All-Out War on Inflation Programme” amid the high policy rates brought in to fight double-digit inflation.
Some analysts feel Erdogan may set out to convince voters the show is more or less still on the road until election day is negotiated, but will then seri- ously consider turning to the IMF for
a rescue. That would be serious tail- between-the-legs stuff given that he rose to power partly on his rejection
of the idea that Turkey can do without the international financial institution.
Pursuing hugely ambitious mega- infrastructure projects over the years has been another vote-winner and Erdogan demonstrated in early December how
he has not given up on such bravado