Turkey shop owners divided, but many stick with Erdoğan

Many Turkish shopkeepers in the southern city of Mersin are sticking with President Recep Tayyip Erdoğan’s government even after the lira slumped to a record low against the dollar, crimping profits.

While the government says the economy is booming, these small business owners aren’t buying either a boom or bust story, Bloomberg reported on Monday.

Some shopkeepers in the industrial port town say the lira’s plight is temporary, and while the government may not make things better, a vote for Erdoğan in presidential elections on June 24 will make sure they don’t get worse, Bloomberg’s Selcan Hacaoğlu and Onur Ant wrote. Others say the government is just delaying inevitable painful steps till after the polls.

Only about 2 percent of voters have been directly hit by market volatility so far and, even if the economy is heading for the doldrums, that won’t happen before election day, according to Mert Yıldız, founder of Foresight, an Istanbul-based economic consultancy company.

“For the opposition to defeat Erdoğan, at least 8 percent of voters should swing sides,” he said. “There needs to be a severe impact from financial markets to the real economy for that kind of voter shift.”

A risky runoff in presidential elections is likely as most polls show Erdoğan doesn’t have the 50.1 percent of votes needed to win in a first round.

Erdoğan brought the elections forward from November next year in an announcement almost two months ago. He made the decision as investors, ratings agencies and the International Monetary Fund warned that the economy was overheating after a raft of stimulus measures boost inflation and the current account deficit.

Opinion polls show the economy is the biggest concern of voters and arguments over government policies are raging in Mersin, Bloomberg said, where Erdoğan’s Justice and Development Party (AKP) and the main opposition Republican People’s Party (CHP) both won four seats in November 2015 general elections. The Nationalist Action Party (MHP), which is in an alliance with AKP in the elections, won two seats.

Turkey’s central bank raised interest rates by 300 basis points to 16.5 percent last week to stem a record decline in the lira after securing approval from Erdoğan. On Monday, it simplified its monetary policy, leading to further gains for the currency, which reached a record low of 4.92 per dollar just before the rates increase.

A local AKP official in Mersin told Bloomberg that a cap on petrol price increases has cushioned the impact of the lira’s slide and “the people know this”.

The AKP is claiming the lira’s slide is a foreign attack on Turkey and this is resonating with many voters, Ant and Hacaoğlu said, citing an opinion poll.