Current economic situation and relations with the West

Current economic situation and relations with the West

Turkey is rapidly approaching an economic bottleneck because it has not done what it needed to do, especially in the last few years. Recently publicized industry production data has revealed that the 2014 growth rate will not reach 3 percent; it will be a little above 2.5 percent.

In the short-term, in other words this year and next year, there is not much hope in terms of growth. Low oil prices are an important factor in increasing growth, but there are a considerable number of factors that threaten economic stability.  

In short, Turkey has entered a troubled growth period and this situation is the most concrete indicator of the economic bottleneck that must absolutely be overcome.

What Turkey can do to overcome this economic bottleneck is quite clear. For the medium term, it should adopt structural measures, changing both production structure and organizational infrastructure. The structural measures that the government announced as “prioritized projects” did not create the desired effect; it was both late and the measures announced were not regarded as adequate technically and visually. Besides, hope in the markets, especially foreign markets, has decreased to the point where economic management, more precisely, the government, will do what it needs to do in the medium term. They know that if it were up to Deputy Prime Minister Ali Babacan, whatever needs to be done will be done, but they see that President Recep Tayyip Erdoğan is not too keen on a change in the current economic structure. For this reason they do not quite believe that the necessary changes will be made to improve production and organizational structure.

While structural measures are not convincing, something have to be done urgently to maintain stability in the Turkish economy. Frankly, foreign capital, which will be scarce in a couple of years anyway, should be drawn again to Turkey. If this is not done, then the indication is 2015 and 2016 will be very tough and that besides a significant fall in growth rates, employment levels will also be at risk.
The effect of foreign relations on the economy

During such a period, Turkey’s relations with the West become much more important. We should not forget that the foreign capital necessary for Turkey’s growth will come from developed Western countries. It is also apparent that the capital expected to come from Arab countries will follow the West’s lead.

Under these conditions, for Turkey to further strain its relationships with the West and to give the image that is especially stands by all those people and all those concepts that the West is fighting against, also poses a risk economically. Prime Minister Ahmet Davutoğlu’s participation at the march organized for the recent Paris massacre was, for this reason, welcomed by economic circles. However, besides that, both Erdoğan and Davutoğlu efforts to continue to focus on such issues, as if they were addressing a local crowd, as the hypocrisy of the West, makes hostility towards Islam stand out. On the other hand, it is positive when Davutoğlu says “We are European,” but it is rather confusing the strict attitude that immediately follows it.

In short, polarization in politics and mistakes in diplomacy may affect the economy, which is stuck in a bottleneck now more than it used to be, and utmost care has to be devoted.