While markets are normalizing, risks crystallize
While the Gezi protests seem to be calming down, it can also be seen that the destruction the powerful protests created in the economy is slowly being rectified. However, this does not mean that this situation has eliminated the existing risks in the economy. On the contrary, the effects of these incidents have shown us that the fragileness of the economy has increased and that they have become visible enough to reach dangerous stages during social unrest.
Meanwhile, we can also say that thanks to this, the relationship between the progress in the economy and democracy has started being discussed. It has been revealed that economic development or stability does not automatically solve the issue of lack of democracy and also that lack of democracy poses a threat to economic stability. Behind this threat, there stands the fact that economic issues have not been solved structurally, plus the economy is foreign-dependent and there is the danger of disruption in the economy with a slight effect.
Following the calming down of the incidents, it is apparent that the meetings and contacts conducted by the Turkish Industry and Business Association (TÜSİAD) and the business world with the government and the president are indicators of the increasing tension in the economy. Business people who have held the meetings said afterwards that not only in tourism but in many other fields ventures have stopped and contracts have started to be canceled. They have obviously conveyed that to the prime minister and the president.
President Abdullah Gül said yesterday that if the incidents don’t stop immediately, then they will affect the economy. He also asked for Turkey’s image to be recovered as soon as possible. He drew attention to the fact that “reputation is built over years but can be lost in one week.” These statements looked as if they were an indicator of the uneasiness he felt for the economy.
Head of TÜSİAD Muharrem Yılmaz, though, felt the need to say that there was no problem related to the economy. The statement Yılmaz said after seeing Erdoğan was noteworthy: “Since we do not have any concerns about economy, this reputation we have achieved in the economy should also be provided in social life and democracy and we have conveyed our views on that. If we have any shortcomings in those areas, then necessary steps should be taken.”
Economic data publicized this week however show the situation before the incidents possessed features showing risks to the economy. In March, unemployment has decreased compared to one month before but when seasonally adjusted it can be seen that unemployment is increasing. While the latest budget figures reveal a positive outlook, it is seen that the increase in foreign debts is rising.
The fact that foreign exchange rates went up very fast especially in the days when Gezi protests affected the economy once more showed how fragile an economy with an external deficit is as well as showing what a huge danger it possess for the finance sector and real sector.
As well as the expected waves in global economy, the crystallization of the vulnerability in economy once more has revealed the urgency of social consensus.