Is Turkey’s economy in trouble? Third quarter results were lower than expected, and far lower than was the case recently, pointing toward potential trouble for the Erdogan-Davutoglu government. As The Financial Times reports:
Turkey has reported much slower growth than expected for the third quarter, with the economy expanding 1.7 per cent compared with the same period a year earlier.The disappointing figure was at odds with market expectations for growth of about 2.9 per cent. It is also the latest indication that the Turkish economy is expanding below its historic trend rate of about 5 per cent — necessary to absorb new entrants into the workforce — after growing by as much as 9 per cent in 2010-2011.The government has predicted full-year growth of 3.3 per cent, but after a strong first quarter economic expansion has slowed.
Turkey’s economy has become heavily dependent on construction and consumer spending, both of which leave it vulnerable if demand drops. The ruling AK Party has blamed trouble in Syria and uncertainty in global markets for these results, but if the trend continues, it will certainly catch at least some of the blame.As is the case with most voters in most places, the Turks are far more interested in domestic policy, and especially economic growth, than in foreign policy. The AKP are often described, with justice, as “Islamic Calvinists” for marrying piety to high economic growth. But their voters are at least as interested in their leaders delivering on the second half of that proposition as on the first. Those of us who are concerned about Erdogan’s designs in the Middle East, therefore, might want to pay closer attention to the construction cranes in Istanbul.