Published On: Sat, Jun 9th, 2018

Economists say Turkey could face difficult times in economy after June 24 elections

Economists say Turkey could face difficult times in economy after June 24 elections

Market place in Turkey


It is no secret that Turkey has been spending much effort to control the devaluation of Turkish Lira against US Dollar and the swiftly rising inflation, not to forget the complication caused by the current account and foreign trade deficits. The problems in economy have certainly been a major blow against the ruling administration as the most vital elections in Turkey’s history are at the doorstep.

The majority citizens regardless of their level of loyalty to ruling AK Party are aware of the “skyrocketing” cost of living that affects their day to day lives in a troublesome manner. If nothing else, this could be a major factor to have an impact on the election performance of AK Party.

As experts comment, the citizens could have to pay a much higher bill after elections, as both companies and individuals are under big debt. To verify this point, similar opinions were shared in a panel organized by Turkey’s economy Authority (TEK, established by M. Kemal Atatürk in 1929 to prevent Turkey from the Great Depression that hit the whole world) and serious warnings were made for a potential crisis the country could incur following elections.

Prominent professors and specialists (such as Tuncer Bulutay, Korkut Boratav, Yılmaz Akyüz, Ercan Uygur, Refet Gürkaynak, Fatih Özatay and Hakan Özyıldız) in economics pointed out that the country was dragged into a crisis not because of “foreign forces” (as often voiced by the government) but due to bad administration of the economy, mainly. Some participants also warned the effects of a likely crisis could be exceptionally destructive as both companies and individuals were in unbearable amounts of debt.

Experts commented that hundreds of billions of liras and especially the KGF loans (Credit Guarantee Fund) the government had injected into the economy to stimulate it, had caused a negative impact to the contrary, increasing inflation, borrowing volumes as well as foreign exchange rates. They added that the government had promised abroad to put on the brakes after the elections and in case of an overdose in this direction there would be a significant pause in the economy.

What the government is actually doing is “try to keep the economy alive by increasing the current account deficit and debts” in order to win the election. The risk here is “excessive levels of indebtedness and shortage of foreign financing” the destructive effects of a possible crisis could be much heavier and it could take as long as 10 years to recover from it.

Another noteworthy point here is “the ratio of the debts of companies to national income” is observed to have increased from 20 percent to 70 percent since 2002 and the debts of individuals have substantially increased, as well. Moreover, in previous crisis people owed money to their neighbors whereas today they owe to banks.

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