Elections 2023. What awaits the Turkish economy

UA:SOUTH continues to follow the elections race in Turkiye. Osman Pashaev briefly analyzed the situation with the economy, referring to three prominent Turkish economists

Kemal Dervish died. This death was not noticed in the world media, and in Ukraine, probably only professional economists know about Dervish.

However, it is this person that Turkiye can thank for the rapid recovery of the economy, growth, and stability that lasted for 11 years - from 2002 to 2013.

Dervish was born in Istanbul to a Turkish father and a German mother. He studied in the USA and worked for many years at the highest levels of the World Bank in Washington.

During the economic crisis of 2001, the Turkish government invited him as an anti-crisis manager. Dervish was given the post of minister and full freedom of action.

He did not invent anything new but acted as a classical monetarist. He introduced strict budgetary discipline, forced the adoption of new legislation on the independence of the Central Bank, and the establishment of the Financial Markets Control Commission. He refused to finance the national debt by issue and carried out mass privatization of state-owned enterprises. And all this in less than a year. That is how long Dervish held the ministerial post. In 2002, most of the parties of the then-government coalition did not even enter the parliament during early elections.

Dervish entered the Mejlis on the list of the Republican People's Party and ended up in the opposition.

The Justice and Development Party came to power, and its leader, Recep Tayyip Erdoğan, later became prime minister.

Turkiye's success went to moderate Islamists who continued the course established by Dervish.

Kemal Dervish was a deputy until 2005, then he signed his mandate and returned to international financial structures in Washington.

And within a year, Erdoğan's government officials began to destroy autonomous institutions, subordinating all processes in the state to the government.

However, such changes were imperceptible to society: control over the Central Bank, banks, and the financial market by the government confused a small layer of specialists. Society understood what was happening with the beginning of the curtailment of political freedoms when protests broke out in Taksim Square in 2013.

Since then, politics and the economy began to degrade together.

Another American economist of Turkish-Armenian origin - Daron Acemoğlu - stated in 2018: the Turkish economy is on the verge of bankruptcy, and the destruction of institutions will lead to an unmanageable situation. He gave Turkiye one and a half to two years. All his predictions came true in 2021 when the lira lost 50%, and in 2022, due to inflation of almost 100%, Turks became twice as poor.

Finally, another economist and former head of the Treasury, Mahfi Egilmez, tried to calculate how many years Turkiye would need to recover.

If, after the elections, the new government abandons populist promises to raise salaries, pensions, etc., the country will need 2-3 years to stabilize the budget deficit and trade balance.

However, the increase in food prices has the greatest impact on inflation. Meat became unavailable for 20% of the population. Agriculture is shrinking at a breakneck pace. The country will need at least 10 years to restore the livestock population.

According to Egilmez, Turkiye has no chance without foreign investments, and they are not going to a country with a controlled judicial branch of government. Reconstruction of the legal system will take 15 years.

In addition, the economy is affected by the degradation of education. Under Erdoğan, dozens of universities were opened in provincial cities, the quality of which Egilmez compares with vocational schools. The best universities lost rectors who were elected by professors. Erdoğan eliminated the autonomy of universities and appointed loyal people to leadership positions. If the government starts educational reform, its revival will take place in 20 years.