The economic experiences of countries do not know continuous successes, without facing challenges, and there are usually problems that affect in some way the performance of the overall economy, and the associated social repercussions that affect the level of satisfaction of society, especially the public that supports the ruling party.
Since 2018, Turkey has lived a new experience in light of the transition from the parliamentary system to the presidential system, with President Recep Tayyip Erdogan becoming the first president through direct elections, and parliamentary and presidential elections are scheduled to be held in Turkey in mid-2023.
Among the important files in these elections are the economic issues that preoccupied Turkish society over the years after 2018, as well as the economic issues that are expected to determine the shape of the economic and social future of Turkish society. Below we discuss the experience of the ruling Justice and Development Party, its successes and challenges, headed by Erdogan.
important achievements
The economic and social experience of the Justice and Development Party in Turkey is characterized by positive and development since it took power in 2003, and in continuation of this positive development, the party headed by Erdogan has achieved many achievements during his first term as President of the Republic, which ends in mid-2023, and the following are the most prominent of these achievements :
Istanbul Airport Opening
Through major projects, President Erdoğan inaugurated his first term in office with the opening of Istanbul International Airport at the end of October 2018, which can accommodate in its first phase to serve 90 million passengers annually, and its four stages of work will be completed in 2028, reaching its maximum capacity to serve passengers, and it can accommodate At that time, about 200 million passengers annually, to be the largest airport in the world.
foreign trade
In terms of foreign trade, Turkey's merchandise exports continue to grow continuously, despite the problems that Turkey has experienced in terms of high interest rates and depreciation of the local currency. However, merchandise exports relied mainly on the strong production base, which turned the exchange rate crisis into an opportunity. .
Turkish merchandise exports jumped to 225 billion dollars by the end of 2021, while they were up to 177 billion dollars in 2018, according to data from the Turkish Statistical Institute.
World Bank database figures indicate that the value of high-tech exports in 2020 in Turkey amounted to $4.17 billion, down from $3.7 billion in 2018.
Natural gas and oil wealth
What was also achieved was the preservation of the rights of Turkey and Turkish Cyprus in the natural gas wealth in the eastern Mediterranean, and Turkey’s willingness to defend its rights in light of the rules of international law, as well as the conclusion of some agreements that would help it in a strong position in this file, by concluding an agreement to demarcate the borders between it and Libya in November 2019.
In August 2020, Erdogan announced the discovery of the first natural gas well in the Black Sea region. Later, other gas wells were discovered in the same region. Expectations indicate that the gas potential in the Black Sea covers the entirety of Turkey's gas needs for a period of 7 years.
On the other hand, oil wells were discovered in Mardin province near the Syrian border, which is a new shift in the energy situation in Turkey. It is worth noting that Turkey imports 90% of its energy needs, at a cost of about $45 billion annually.
In June 2021, President Erdogan inaugurated the Istanbul Canal Project, in order to relieve the heavy congestion on the Bosphorus Strait, which connects the Black Sea and the Sea of Marmara, as the capacity of the strait bears the passage of about 25,000 ships annually, while about 43,000 are now passing through it. ship each year, which leads to a longer period of time for ships to pass.
It is expected that the number of ships passing through the Bosphorus in 2050 will be about 78,000, and the cost of the Istanbul Canal is targeted at $15 billion.
development of defense industries
As for the defense and armament industries, data from the Stockholm Peace Institute indicate that Turkey during the period from 2016-2020 increased its arms exports by 30%, compared to the previous five years from 2016, and that Turkey's arms imports during the period 2016-2020 decreased By 59% compared to the previous five years of 2016.
Also, the published information on the contribution of companies and projects related to the defense industries in Turkey indicates that the Defense Industries Authority is supervising 750 projects, worth 50 billion dollars, compared to only 26 projects in 2002.
In addition, the number of companies operating in the defense industries in 2020 reached 1,500 companies, after it was only 56 companies in 2002, and Turkey is expanding in the export of its defense products, including drones, submarines, ships and military vehicles, as well as advanced types of pistols and rifles.
Auto industry
In the field of the automobile industry, Turkey has succeeded in making itself a strategic center for the automobile industry, as it includes in its local companies, about 13 international companies of major brands in the field of automobiles, and these brands are taken from 9 Turkish cities as a place to set up their factories.
Data on Turkey's foreign trade indicate that during the years 2016-2021, Ankara exported about 900,000 vehicles to 180 countries, and that car exports from Turkey in 2020 amounted to $25 billion, distributed over 118 countries.
Thus, the auto industry occupies the forefront of the exporting sectors, and Turkey aims to be the first in Europe in the electric car industry and the fifth in the world.
Tourist expansion
In the tourism sector, Turkey is among the top 10 tourist destinations in the world, and during 2021, it was able to restore the vitality of the tourism sector in light of the Corona pandemic, as data from the Turkish Statistical Institute indicate that the number of tourists to Turkey reached 29.4 million, compared to 15.8 million. in the year 2020.
Tourism revenues for Turkey in 2021 amounted to 24.5 billion dollars, compared to 12.1 billion dollars in 2020.
Among the most important achievements of Justice and Development and President Erdogan, is the government’s positive performance in the Corona crisis, as it provided free health care to all those affected by the pandemic, as well as provided free vaccinations, with social care for the elderly, as well as supporting economic activity for sectors affected by the crisis.
One of the most important positive aspects in this file was the transparency that characterized the government’s performance in managing the crisis, and the interaction of the Turkish people with health sector workers was observed in a large way, through the activities they organized in this matter.
Turkey is among the top 10 tourist destinations in the world (Reuters)
Challenges
Since 2013, Turkey has taken political and military positions, which have made it a target by regional and international powers. Turkey's supportive stance of the Arab Spring revolutions and its embrace of opponents of counter-revolutions, from Arab countries and even the region, made it a political and economic target.
The exit of its military forces in a number of regional and Arab countries had an impact on some attempts to pressure it economically to thwart its regional political and military role, in addition to several factors related to local politics, which led to a set of economic challenges, during the post-2018 period, including:
Devaluation of the local currency
The Turkish lira was subjected to violent speculative operations during the period from 2018-2021, and the mechanism developed by the Ministry of Finance in cooperation with the Central Bank of Turkey on December 20, 2021, was an important way out. Under this mechanism, savers were assured of their wealth, by guaranteeing the value of the savings, In the event of negative fluctuations in the exchange rate of the lira.
According to central bank data, the price of the dollar in January 2018 reached about 3.8 pounds, and since that date the lira has been declining in value against the dollar, for reasons, some of which are economic, but most of them are due to political reasons, until speculation reached its peak in December 2021 Where the exchange rate exceeded 18 pounds to the dollar, then the government presented its mechanism to maintain at an exchange rate of 13.5 pounds to the dollar in February 2022.
high interest rates
After 2016, the interest rate remained at 8%, then started to rise, until it reached 24% in 2018, then fell again to 8.5%, and then rose again to 19%, an issue that led President Erdogan to dismiss three of the governors The central bank, according to its constitutional powers, but in December 2021 the interest rate reached 14%, and economic policies are aimed at lowering the interest rate than it is now.
High rates of inflation
In the context of the turbulence of the monetary policy of the Turkish Central Bank, during the period from 2018-2021, this resulted in the rise in inflation rates to unprecedented rates in the history of the Justice and Development Party’s assumption of power.
According to data for January 2022, the inflation rate reached 48.6%, and the Central Bank expects the inflation rate to reach 55% next May, and then decline at sharp rates.
It was natural for the inflation rate to rise, in light of the significant decline in the value of the local currency, but Turkey's economic policy aims to reduce inflation rates, after the end of the current wave, which lasts 6 months, and ends next May.
High inflation rates are among the challenges facing the Turkish economy (Reuters)
Supporting and sticking files
The Justice and Development Party (AKP) and President Erdogan are running the mid-2023 elections, relying on a legacy of economic and social achievements, foremost of which is the infrastructure boom, improving the standard of living of individuals, with an average per capita income of more than $10,000 annually, as well as maintaining Turkey's productive capabilities. The continuation of targeting exports, and the recovery of the tourism sector, as it provides job opportunities and increases the value of GDP.
However, there are other files that represent a challenge to the party and President Erdogan, and they are striving to make important achievements in the files of challenges, including the increase in burdens on families, high inflation rates, and an increase in the prices of goods and services. Therefore, the Turkish government aims to reduce interest rates to acceptable rates, And that the inflation rate decreases, and that the lira is in a better position in terms of the exchange rate, which will reduce the burden of living burdens on Turkish families.
The opposition takes these files, which represent challenges for the Turkish government, as a material to attack it, and it usually resorts to attributing the decline in these indicators to the government’s mismanagement, and the opposition does not come close to the political reasons at all, despite the fact that it represents the greatest weight in the occurrence of these problems.
Scenarios of economic issues
The results of the Turkish elections do not depend largely on ideologies - even if they exist in some way - but society is betting on the goods and services it receives. Therefore, the reality of the economic performance of the Turkish government, and what resulted in the lives of citizens, will have a significant impact on the vote.
Hence, the remaining period, which is about a year and 4 months, is an opportunity for the Justice and Development Party to focus on changing the nature of the social equation, and there is a positive opportunity that may help Justice and Development and President Erdogan in the 2023 elections, especially in the context of economic files.
It is that the experience of local parties that won about 5 major municipalities, was not positive on the economic level, especially in the largest municipalities, Istanbul, where the citizen feels disappointed in the performance of the municipality, especially in crises, and the failure of the mayor of Istanbul to fulfill many of his electoral promises, Especially in the case of reducing the prices of goods and services.
It can be said that the likely scenario is that the Justice and Development Party and President Erdogan will be at the forefront of the electoral results, but under difficult circumstances and fierce competition.