Turkish economy struggles amid political uncertainty ahead of referendum

ANKARA, April 6 (Xinhua) — Despite serious assurances given by government authorities, Turkey’s once flourishing economy shows signs of weakness ahead of a crucial referendum which would significantly increase President Recep Tayyip Erdogan’s powers.

Turkey’s economy grew 2.9 percent in 2016, with 3.5 percent in the last quarter, despite negative outlooks by credit rating agencies. Figures have been naturally welcomed by the government.

Speaking at a rally in the capital Ankara on the weekend, Erdogan said the 2.9 percent growth in 2016 is not enough for Turkey, but it is above the estimates of credit rating agencies he criticized in the past.

The data issued by the Turkish Statistical Institute last Friday put Turkey’s gross domestic product (GDP) growth at 2.9 percent in 2016, with a per capita income of 10,807 U.S. dollars, lower than government forecasts and significantly lower than the 6.1-percent growth in 2015.

The World Bank forecast Turkey’s growth at 2.1 percent for 2016 while rating agency Moody’s predicted 2 percent.

But the “Turkish miracle” seems to be something of the past in only less than a decade. Strong economic growth has been one of the main achievements of Erdogan’s government which solved the issues of unemployment and poverty.

However, unemployment rate climbed to 13 percent in last December, the highest level in seven years. The inflation rose to nearly 11.3 percent in March, the highest since October 2008. The Turkish lira hit an historic low against the U.S. dollar and euro, putting companies that bet on these currencies in a very difficult spot.

But the lira has managed to stabilize over the last few months after the central bank began tightening policy at the start of the year.

The outlook of Turkey’s tourism, a major economic sector, has also never been so bleak. Increased attacks by the Islamic State group and Kurdish rebels drove the country into its worst tourism slump in 2015 and 2016.