Turkey's economic woes cast shadow over Erdogan's election

Turks will vote in presidential and parliamentary elections next Sunday, four months earlier than dictated by the electoral calendar. And polls indicate that President Recep Tayyip and his Justice and Development Party, the AKP, are losing support after 16 years in power. So why the snap poll?

AKP campaigner in Istanbul on Monday Tony Cross/RFI

“When Erdogan called this early election, I think he has been forced by economic conditions,” economist and columnist Mustafa Sönmez echoes many analysts’ view that Erdogan has brought the election forward because the voters are feeling the pinch.

Growth may be a robust 7.4 percent, as Erdogan never fails to point, but other indicators are not so healthy.

Inflation is a whopping 12 percent, unemployment 10 percent and the lira’s exchange rate is falling.

With inflation squeezing demand, the exchange rate is also bad news for many businesses, the kind of people who have voted AKP in the past.

Shoppers in Eminonu Tony Cross/RFI

“Most of the stock we sell in our store comes from abroad, so the rate of the dollar and the euro is very important to us and the fall of the Turkish lira puts us in a very difficult situation,” Seyhmus Akkaya, who runs a shop in an arcade full of electrical goods businesses in Istanbul’s Eminönü district.

His sales are down 50 percent compared to a year ago, he says, but he will vote for Erdogan, hoping that the situation will improve after the election.

Muhammed Akcotoya, who sells audio equipment, faces the same problem with the prices of imports.

On top of that, despite Erdogan’s appeals to Turks to patriotically swap their dollars for lira, he has to pay his rent in dollars, so his profits are squeezed.

“We have only raised prices on a few products,” he says. “We can’t raise prices if we want to keep customers, they won’t buy if we sell them dearer.” 

Although Akcotoya refuses to say who he will vote for, he does accept Erdogan’s claim that the economic problems are because of an international plot.

 “The reason is foreign powers,” he declares. “They’re trying to harm Turkey. That’s why they’re making the dollar and the euro higher.”

Many shopkeepers also put their problems down to uncertainty linked to the election, as well as a usual fall in business during the holy month of Ramadan.

Campaigning for the AKP in another part of the city, Yasin Akkaya, insists his party still has plenty of support and says the shopkeepers’ problems are their own fault.

“People want to buy good products but in places like Eminönü they sell poor-quality goods,” he claims. “That’s why people don’t want to spend money on their stuff and that’s why in Eminönü business is not good.”

Despite many traders’ hopes that the situation will improve once the election is over, economist Sönmez thinks they will get worse.

“The growth rate is supported by the government with artificial means, by a huge amount of credit, public spending. All these are not sustainable, so with these incentives the economy has grown, but inflation has increased, the current account deficit has increased, public finance has increased, it’s artificial, it’s kind of hormonal growth, so we are expecting that in the second half of the year the economy will slow down.” 

Erdogan has acquired a reputation for authoritarianism, not only with his opponents at home but also abroad, especially in Europe, a key market and source of investment for the country.

The ongoing state of emergency, declared after 2016’s failed coup, the firing of thousands of civil servants and other workers, the jailing of alleged coup plotters and political opponents, like Kurdish presidential candidate Selahattin Demirtas, have all be criticized.

And a clampdown on the media means that some potential investors do not believe financial news about Turkey.

Like investors, foreign lenders have lost confidence in the Turkish government, Sönmez warns, and will call in current debts and charge more for future loans.

If that’s true, even if Erdogan wins the presidency again, there are tough times ahead for Turkey.