The economic effects of Turkey’s long holiday break

The economic effects of Turkey’s long holiday break

“I am shocked by the tourist profile coming to Cunda these days. Where do they come from? Why do they come if they aren’t going to spend any money?” That is what taxi driver from a village near the idyllic Aegean town of Ayvalık told me recently.

“Don’t get me wrong, it’s not shameful to be poor. But why take your children on vacation if you can’t buy them anything they want? We used to host high-end tourists but Cunda is becoming increasingly busy, which makes higher end tourists stay away. And the new crowds only spend money on tea and ice cream,” he said. 

Restaurant owners were apparently no happier about those tourists who are staying longer, in terms of their spending.

Obviously we cannot be judgmental about a family that prefers to take a daily cruise on a minimum budget. That is their choice and no one can chase them away because they are not spending money.

Indeed, one of the reasons that makes Greece a popular destination among many Turks is the fact that there you generally do not have two waiters circling around you to force you to order something every 20 minutes on a beach or in a restaurant.

But if taxi drivers are complaining about people using bank credit for even just a modest vacation, that should tell us something alarming about Turkey’s economic situation and the projections being made for its tourism industry.

Some 20 million people are expected to travel during the Eid al-Adha (Feast of Sacrifice) holiday, which officially started for public officials on Aug. 26 after a 10-day extension. 

Some 15 million people are expected to travel by plane, train and buses, while 5 million people will use their own vehicles. Intercity buses are expected to transport a million passengers every day. The transport industry will no doubt benefit from the government’s decision to extend the holiday season. 

With European tourist arrivals hitting a historic low and with only a limited recovery from the serious blow caused by the political tension between Turkey and Russia, the tourism industry has been waiting anxiously for this extension decision.

Using bank credit to pay for a vacation
But not all travelers can be considered tourists, as most of them are simply going to their hometowns or families. “We are expecting 1.5 million people to travel and $1.5 million in income,” Deputy Tourism Minister Hüseyin Yayman has said.

It is impossible to know how many of these travelers are using bank credit for the holidays, but my taxi driver was right to be astonished at the phenomenon. “Why would you use bank credit? You will only end up having difficulty paying it back in the winter,” he said.

Seeing people who previously were not in the habit of going on vacation starting to take on such a habit could perhaps be seen as a good development - a sign of a rising middle class (if they can afford it). But this is the problem: Turkey has very low saving rates and it is not a healthy sign for people to be living on a perpetual (and increasing) debt.

And obviously, while some sectors may enjoy the extension of Eid al-Adha other sectors will suffer from it, especially those who do business abroad.

It will be interesting to see the overall balance sheet of the ongoing extended break on the Turkish economy. Still, at least the words “holiday” and “vacation” have a positive connotation. One hopes that this period will at least serve as a short break from the perpetual tension that the country has long been embroiled in.