Turkey’s two-year election economy - columnist
Turkey is set for another two years of populist decision-making as a triple election in 2019 looms. The question is, will the economy be able to withstand it, writes Erdal Sağlam, a columnist for the daily Hürriyet newspaper.
The government is set to press on with measures to boost economic growth, including a loan guarantee scheme for troubled companies. Businessmen are already starting to talk about possible tax amnesties as well, Sağlam said on Tuesday.
Much will depend on whether the normalisation of interest rates and monetary policy in the global economy gathers pace in 2018. Turkey was helped by short-term portfolio inflows to help finance its current account deficit last year because that normalization proceeded at a slower pace than many investors expected.
The government will point to the budget deficit as proof that it is acting responsibly and, to be fair, it managed to stimulate the economy ahead of elections in the past without threatening fiscal discipline. But the global environment may not be so conducive going forward, Sağlam said.
Turkey has already extended the period during which it helps finance the minimum wage into 2018, a measure that wasn’t planned in the budget when it was approved in November, he said.
The government will also have to tackle the fallout from probable financial penalties on banks for breaking U.S. sanctions on Iran, and an increase in domestic political tensions. Oil prices may also surge, pressuring the economy, Sağlam said.