Turkey’s main problem is its rapid population growth. In the mid-70s of the last century, the number of citizens was about 40 million, today it is approaching 90 million, that is, it has doubled over the past 50 years. Add to that the four million Syrian refugees who also need housing and jobs. At the same time, the territory of the country has remained the same, and the capacity of foreign markets is not developing so fast to ensure employment for all. Erdogan’s political survival depended on his ability to provide his country’s citizens with economic prospects and wealth. The key to victory in this election was an effective economic development program. Erdogan managed to formulate such a program and even begin to implement it.
To give work to everyone, we must increase the number of jobs. But the problem is that European markets, the main outlet for Turkish products, are developing rather slowly. Therefore, to be successful, it is necessary to increase Turkey’s share in these markets, that is, to make the economy more competitive and export-oriented. And for this you need to reduce the cost, including reducing labor costs, if you count them in dollars or euros. The undertaking is admittedly risky, as no one wants to lose wages, and such a policy may well meet with unanimous opposition.
To achieve his ends, Erdogan, using personal leverage, took de facto control of the Turkish Central Bank and forced it to keep the rate low, which is now 8.5%. Inflation has become a natural reaction to cheaper access to money; today it is around 44% on an annualized basis. In fact, this is the main vulnerability of Erdogan’s policy, and his opponents hit this weak point most often.
However, he insisted on his own and assured that even with the rapidly rising prices, the rate remained at a low level. In fact, the Turkish Central Bank distributes money for free to everyone – just take it and invest it in something real that brings at least some profit. Such stimulation, although not without problems, makes it possible to maintain industrial production, and above all, to increase exports, which have multiplied by one and a half times in the last 3 years. At the same time, inflation slows down imports, which contributes to correcting the trade balance. Additional opportunities for the development of the Turkish economy provided close ties with Russia, including here the export of Turkish products and the possibility of obtaining various goods at affordable prices.
Yes, inflation is a big problem, but for those who focus on consuming not imports, but local Turkish products, the gap between income and expenditure does not increase, because wages and prices increase at about the same rate.
The revival of the Turkish economy, resulting from such stimulation, is confirmed by statistics, the state of mind of the population and business. Despite all the problems, the country’s GDP is growing steadily, last year’s economic growth amounted to 3.5%. Despite population growth, the GDP per capita does not decline and remains at the level of more than $13,000 per person per year. During Erdogan’s tenure, that is, over the past 20 years, this figure has more than doubled, again, despite all the problems and restrictions. The business climate is in the positive zone and has improved significantly in recent months, which is particularly important, Erdogan’s victories in both rounds have been accompanied by a noticeable increase in the Turkish stock market, which shows clearly who the company supports.
Of course, there were those who weren’t satisfied. The inhabitants of the big cities and of the European part of Turkey, businessmen and financiers focused on relations with the outside world and the consumption of imported products, saw that Erdogan’s policies impoverished them. However, the number of beneficiaries turned out to be higher. It was their votes that ensured Erdogan’s victory in the presidential elections. Which once again shows how important it is to work with the population, to show them a clear and understandable picture of the future and to create the conditions for its implementation.
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