Turkey is on borrowed time

Turkey’s current government, the AKP, Turkey’s Justice and Development Party, won 48% of the vote in local elections last Sunday. The main opposition achieved just 28%.

Prime Minister Recep Erdogan pledged to punish his rivals for being part of what he described as a foreign-backed conspiracy to topple his government.

In recent months, Erdogan has sought to derail a corruption probe into his administration by overhauling the police and the judiciary.

What the commentators said

Turkey under the AKP, which gained power in 2003, “offered hope of an Islamist majority that could govern as a pluralist democracy”, said The Wall Street Journal. But in recent years it has started to look more like a “sectarian autocracy”.

Erdogan has arrested critics and journalists, tried to politicise the judiciary and even tried to ban Twitter and Facebook, two news sources that counteract the AKP’s media dominance.

But none of this seems to bother the average voter much, as Ali Berat Meric noted on Bloomberg.com. That’s because the AKP has given the economy a big boost. Turkey’s GDP per head, adjusted for inflation, has doubled to $15,000 since it took office. The party improved infrastructure and health care provision.

“Without a major economic downturn… the Turkish people will not give up their attachment to AKP”, said Omer Taspinar of the Brookings Institution.

But that might not be too far away. The economy is slowing sharply. Recent jitters over the prospect of the US Federal Reserve reducing its level of money printing have forced the Turkish central bank to raise interest rates sharply to keep much-needed foreign capital from fleeing the country, noted Capital Economics.

This hike in rates is likely to cause domestic demand to slow sharply, or even shrink. If Erdogan’s popularity depends on rapid economic growth, his star may well have peaked.

• Stay up to date with MoneyWeek: Follow us on TwitterFacebook and Google+

MoneyWeek magazine

Latest issue:

Magazine cover
Party's over for Putin

The only portfolio safe from Russia's rout

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

Hedge fund manager Hugh Hendry: 'It felt like the sun rose only to humiliate me'

In a series of three short videos, Merryn Somerset-Webb talks to Hugh Hendry, manager of the Eclectica hedge fund, about everything from China to the US, Europe, and Japan.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.


19 December 1932: BBC World Service begins

The first royal Christmas message by George V gave the fledgling World Service an early boost six days after it was founded in 1932.