Corona and the economy in Turkey: Erdogan's double crisis

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Turkish President Erdogan: The myth of the successful manager Erdogan has long been used up

Recep Tayyip Erdogan's last presidential election campaign in 2018 had the motto "Hedef 2023": Goal 2023. In the 100th year of the founding of the republic, the Turkish head of state promised, Turkey would advance among the ten largest economies in the world. The government has never been further from this goal than this summer. 

The Turkish economy has been in crisis for years. In 2018, a customs dispute with the United States caused the lira to collapse. The outlook has now darkened even further due to the corona crisis.

The lira has lost a quarter of its value against the euro since the beginning of the year. At almost 9: 1 compared to the euro, it is at an all-time low. Inflation is constant at twelve percent. The collapse of the currency has far-reaching consequences for Turkey, which is more dependent on imports than other countries: imports are becoming more expensive, corporate profits are falling, and purchasing power is falling.

The weakness of the lira also makes it more expensive to repay loans. The rating agency S&P estimates that more than a third of all loans were taken out in foreign currencies. If there are massive loan defaults as a result of the currency collapse, the Turkish banks could sit on some of the claims - and thus get themselves into difficulties.

Experts have been urging the government to raise interest rates for years in order to stabilize the lira. Erdogan, however, is resisting such measures, fearing that they could stifle the economy. He claims higher interest rates lead to inflation. 

Every fourth Turk under the age of 25 is unemployed

In addition, tourism from abroad, one of the most important pillars of the Turkish economy, has partially come to a standstill due to the corona pandemic. Usually foreign guests bring money and foreign currency into the country - and secure thousands of jobs. 

In the first half of 2020, however, the number of visitors from abroad fell by 75 percent to 4.51 million. Although some travel warnings have been relaxed in the current quarter, the losses will not be offset. Around every fourth Turk under the age of 25 is already without a job. 

Erdogan was once elected because he credibly promised the people of Turkey more prosperity. In the first few years of his tenure, the Turkish economy grew like only the Chinese otherwise. But the myth of the successful manager Erdogan has long been used up. Many Turks are now considered to be the main culprit for the misery. Oppositionists criticize his erratic style of government, his attacks on democracy and the rule of law and his conflicts with the Europeans, also weakening the economy.

Hundreds of thousands are leaving Turkey - many are under 35

Erdogan now rules primarily through fear. His government has just passed a law that, after the media and the judiciary, now also largely puts the Internet under the government's control. 

Young people in particular are turning away from the long-term ruler. More and more people are now looking for their salvation abroad. Last year alone, more than 330,000 people left Turkey, around 40 percent of them were between 20 and 34 years old.

The Turkish Sodev Foundation recently asked people between the ages of 15 and 25 if they would live abroad if they had the chance. Almost half of the respondents who described themselves as supporters of the ruling AKP party answered the question in the affirmative.

The displeasure among the young could endanger Erdogan in the next presidential election. More than seven million young voters will be able to cast their votes for the first time in 2023.