What does Turkey need to do after elections, to recover its economy ?
Turkey is now over with presidential and deputy elections which has resulted with the victory of Nation’s Alliance consisting of ruling AK Party and its ally MHP (Nationalistic Movement Party). On the other hand Mr. Tayyip ERDOGAN has been chosen as the first president of the new system (presidential) furnishing the president with ultimate authority (and over the parliament as well). Mr. Muharrem INCE, the candidate of CHP, main opposition party has run a real successful campaign which has not brought him victory in the end, however.
The question in front of Turkey now is “What will happen after the elections”. It is no secret that the administration had to make sacrifices during the campaign, as far as the fiscal discipline is concerned to attract more votes (not to lose the existing ones in any case). It goes without saying those with a little common sense were well aware that the bill to pay for the public would be substantial right after the elections via new taxes or increased rates etc. for the administration to make up for extra spending and sacrificed revenues (even if temporarily) such as frozen fuel prices to win the elections. Prior to elections everything in the economy was based on the mode of “let us get over with the elections first”
Now talking about the Turkish Economy we are referring to an economy that was hardly affected by 2008 crisis and survived the great economic crisis in Europe between 2012 and 2014 without much damage and eventually managed to achieve a growth of 7.4 percent only one and a half years after the failed coup attempt in 2016.
However, Turkey’s Economy considered as the 17th largest globally with US$ 850 billion has been struggling with issues much likely to get chronic despite high growth rate, increasing exports, low public debt potential. Many economists, experts and professionals in business world strongly believe and agree that solid reforms are needed to bring solutions to such issues.
To recap, the issues to be urgently handled seem to be as follows:
Banks, real sector and loan relations and system
Import dependency of manufacturing industry and technology used
Handicap with production costs of industry based on foreign exchange rates
Intensive use of energy and imported raw materials in the industry which mainly produces and exports low value added products
The fact that foreign exchange deposits of citizens have substantially increased (pointing to high dollarization)
Issue of how to cope with foreign exchange debts of the real sector estimated to have reached US$ 220 billion after the swift depreciation in Turkish Lira
Alarming rise in inflation which affects life standards badly
It goes without saying should the administration have solid and sincere intentions to cure these problems, painful prescriptions would be inevitable and that is exactly why they had to wait until after the elections.
Now many think it should be much easier to act for the rapid and perhaps painful treatment of chronic problems diagnosed in the economy thanks to the new presidential system furnishing the president with almost unlimited authority and the more so as his party is in possession of the majority in the parliament as well. In fact, the president can appoint names that can make radical decisions in the presidential system to recover the economy much faster with correct recipes.
Therefore, now is the time to focus on problems swept under the carpet before elections, and get down to work, to write necessary prescriptions. One thing is for sure though; the bill will be on the citizens.
