Turkey’s ‘v-shaped’ economic recovery a dream, columnist says

The Turkish government says the economy is in the middle of a ‘v-shaped’ recovery, citing an increase in output following the coronavirus pandemic.

But predictions of sustainable growth for the maligned economy look too optimistic given the state of manufacturing and investment, according to Ibrahim Kahveci, a columnist for the Karar newspaper.

Kahveci said on Friday that the capacity utilisation of manufacturers has been in decline since 2017, even after the government sought to stimulate production and exports through cheap loans and other financial incentives.

Manufacturers were using up to 80 percent of their capacity in 2017, when the government distributed capital under its Credit Guarantee Fund. But the rate fell to around 74 percent in 2019 and to below 70 percent this year during the coronavirus pandemic, Kahveci said.

More production and investment are needed to meet the needs of 1 million people entering the workforce each year, he said.

A key indicator of Turkey’s economic health is machinery investment, Kahveci said. The spending rose steadily between 2010 and 2015 but has since been in steady decline, he said.

Therefore, Turkish Treasury and Finance Minister Berat Albayrak’s prediction of a swift and sustained recovery from this year’s economic crisis looks like a pipe dream without the new investment and factories Turkey so desperately needs, Kahveci said.