Turkey is on borrowed time

The Turkish government has relied on the improving economy to keep voters sweet.

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

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.

Recommended

I wish I knew what an emerging market was, but I’m too embarrassed to ask
Too embarrassed to ask

I wish I knew what an emerging market was, but I’m too embarrassed to ask

This week's “too embarrassed to ask” explains what emerging markets are, and why you might want to invest in them.
9 Sep 2020
Bullish investors return to emerging markets
Stockmarkets

Bullish investors return to emerging markets

The ink had barely dried on the US-China trade deal before the bulls began pouring into emerging markets.
27 Jan 2020
Beware the hidden risks when investing in emerging markets
Investment strategy

Beware the hidden risks when investing in emerging markets

Emerging markets look cheap compared with developed countries, but earnings may be less trustworthy.
23 Dec 2019
The British equity market is shrinking
Stockmarkets

The British equity market is shrinking

British startups are abandoning public stockmarkets and turning to deep-pocketed Silicon Valley venture capitalists for their investment needs.
8 Nov 2019

Most Popular

How the stamp duty holiday is pushing up house prices
Stamp duty

How the stamp duty holiday is pushing up house prices

Stamp duty is an awful tax and should be replaced by something better. But its temporary removal is driving up house prices, says Merryn Somerset Webb…
25 Sep 2020
Beware: even the greatest brands can fail
UK Economy

Beware: even the greatest brands can fail

For decades, John Lewis seemed to exist in a parallel universe. Now, a grimmer reality has dawned
27 Sep 2020
Can Rishi Sunak’s winter plan save the UK economy?
UK Economy

Can Rishi Sunak’s winter plan save the UK economy?

With his Winter Economic Plan, chancellor Rishi Sunak is hoping to support the economy through the dark months ahead as restrictions tighten again. Jo…
25 Sep 2020