ISTANBUL: Concerns are growing over the health of the Turkish economy, long seen as a star performer among emerging markets, partly due to unorthodox statements by President Recep Tayyip Erdogan on economic policy that have rattled investors.
Turkey’s economic success of the past decade has been one of the pillars of the undefeated electoral success of Erdogan and his Justice and Development Party (AKP), with robust foreign investment and solid growth rates.
But economists now fear Turkey could be heading for an era of much lower sub-three percent growth as the AKP loses its reformist zeal ahead of June legislative elections, and Erdogan concentrates powers around the presidency after moving from the job of prime minister to head of state in August.
Moreover, Erdogan has become embroiled in a sometimes farcical row with the central bank, repeatedly telling the nominally independent institution in ever more heated terms to aggressively cut interest rates despite plus seven percent inflation.
His comments unnerved markets and Turkey’s already embattled lira this week, for the first time, fell in value to the 2.50 lira against the dollar.
“At the moment, it’s not clear whether this is posturing ahead of the election or more serious. But it does raise more general concerns about institutional independence in Turkey,” William Jackson, senior economist at the Capital Economics consultancy in London, told Agence France-Presse.