Economic woes trump politics ahead of Turkey elections
"The fridge is half empty. How are we supposed to fill the fridge at these prices?" says housewife Ayse Tatar, 54, as she shops for dinner at a bazaar in Istanbul's Uskudar district. According to a speech by President Recep Tayyip Erdogan at a campaign rally, an increase in the sale of refrigerators is proof that the economy is doing well. "If there is a refrigerator in every house, then we are on a certain level of prosperity," Erdogan had said.
But how good are things, as Tatar points out, if people have trouble keeping those fridges from being empty?
Erdogan's comments sparked a wave of memes on social media, including one depicting Turks as cavemen before Erdogan came to power in 2002.
The Turkish economy grew by 7.4 percent in the first quarter of 2018. However, a high inflation rate of 12.15 percent and a nearly 20-per-cent depreciation in the lira since the beginning of the year is making life harder for ordinary Turks.
Food prices increased 11 percent in May compared to a year ago, according to the state statistics office TurkStat. The price of bread, potatoes, onions and meat – all essentials in Turkish households – have gone up since the start of the Muslim fasting month of Ramadan in May, according to Haberturk daily.
"They expect us to pay the rent, bills and feed the family with this minimum wage of 1,600 liras (345 dollars). There is nothing left in the pocket to shop for Eid ul-Fitrû," says Erdem, an accountant, as he checks price tags in the same Uskudar bazaar.
Erdogan lost in the conservative Uskudar district – where he has a house and votes – as well as three major cities in last year's referendum to expand his political powers. Many think this sent a message to the strongman to reconsider his aspirations.
"The economy risks getting worse if Erdogan keeps fighting the markets and ignores the people," says one stock market trader who did not want to give his name.
Erdogan built up his popularity on strong economic growth through the first decade of his rule. Turkey managed to weather the 2008 global crisis and enjoyed cheap loans, as did many of its emerging peers. But now with the U.S: Federal Reserve raising interest rates, countries like Turkey are looking less attractive for foreign investors to park their cash in.
"The current market volatility, exacerbated by lack of reforms and political risks, make Turkey even more vulnerable to external shocks," Deniz Cicek, an economist with QNB Finansbank, tells journalists.
Foreign direct investment in Turkey was at 10.8 billion dollars in 2017, the lowest level in seven years, Economy Ministry data shows. And Erdogan's plans to accumulate even more power, including over the central bank, could make things even worse, according to analysts.
The Turkish president opposes higher interest rates, claiming they cause inflation, though orthodox theory indicates the opposite. "Election uncertainty and corporate foreign exchange debt are the two key risks," Cicek says, adding that the central bank has yet to reassure investors that it is independent. The central bank has hiked its key rates by 500 basis points in less than two months. The impact on the lira was, however, short-lived.
A weak lira is hurting small and large businesses alike. Some of Turkey's biggest companies, including food giant Yildiz, Turk Telekom's major shareholder Otas and Dogus Holding, have had to restructure a debt burden totalling more than 17 billion dollars, according to company statements.
"We are just killing time here. No customers since the morning and it is not getting any better," says Remzi, a gold trader at Istanbul's historic Grand Bazaar. Erdogan's calls for citizens to put their savings in the bank have fallen on deaf ears, according to the gold trader. "No one is changing their gold or foreign exchange for money. And I have to pay my rent in U.S: dollars at the end of the month," adds Remzi in disappointment.
Erdogan's main rival, Muharrem Ince, from the secular Republican People's Party (CHP), threatens to dent Erdogan's popularity in the grassroots. Recent polls have indicated the presidential election could go to a second round and it remains unclear if Erdogan's ruling Justice and Development Party (AKP) will retain its majority in parliament.
A fiery speaker, Ince, a former physics teacher, galvanises large crowds at his rallies, often focusing on economic problems and the lavish presidential palace in Ankara and promising to end excessive public spending. "Inflation in the kitchen has hit 30 percent. Turkey is sinking, it is sinking," Ince told an election rally in the Black Sea province of Ordu last week. "My dear people, the truck is about to crash into the wall." (dpa)