Took the authority, couldn’t give the effect

The Turkish economy is going through difficult times. While the Turkish lira hits record lows against foreign currencies, millions of citizens, from bosses to employees, young to old, are watching developments with concern.

President Recep Tayyip Erdoğan, in his speech on June 19, 5 days before the June 24, 2018 elections, said: “This kind of change and so on, none of these things will determine our future, we will determine our future. On the 24th, give this brother the authority, and then you will see how to deal with this and that with this interest.”

Erdogan was given the authority and on July 9, 2018, the presidential system of government was introduced.

Looking at the macroeconomic data since then, it is seen that the Turkish economy is getting worse day by day in the presidential system, which is said to blow up the country’s economy.

“I am responsible for the economy of Türkiye!” With the new economic model that Erdogan announced at the end of 2021, he upset all the balances in Turkey.

Although the rise in the exchange rate and the increase in the cost of living accelerated the deterioration of the economy,
almost many indicators are sounding alarm bells.

BIG TL DECREASE

The dollar exchange rate, which was 3.77 TL in December 2017, at the end of the year before the transition to the presidential system, has reached 19.25 TL today. The dollar appreciated 410 percent against the TL in said period.

WE ARE NOT IN THE TOP 20

In 2017, the last year before the transition to the presidential system, Turkey ranked 17th in the world with a Gross Domestic Product (GDP) of $851 billion. Turkey, which fell rapidly in this league after the transition to the presidential system, fell to 21st in the ranking with a GDP of 817 billion dollars. Estimates show that Türkiye may slip back to 23rd place in 2023.

BUDGET DEFICIT

The budget deficit in 2017, the last year before the transition to the presidential system, fell to 1.5 percent of GDP. This rate is 2.4 percent as of February 2023. Consequently, the budget deficit in the AKP government decreased until the transition to the presidential system, and seems to have started to increase again after the transition to the presidential system.

INFLATION IS OUT OF CONTROL

In 2017, the last year before the presidential system was introduced, inflation was 11.9 percent. At the end of 2022, inflation exceeded 64 percent. Although inflation for March 2023 increased to 50.51 percent due to the base effect, it has been continuously increasing for 51 months in the consumer price index. The AKP government, which managed to significantly reduce inflation before the transition to the presidential system, seems to have lost control after the system change.

LOSS OF CURRENT

In 2017, the last year before the presidential system, the ratio of the current account deficit to GDP increased to 5.5 percent. Although this figure decreased to 1.8 percent at the end of 2021, this rate increased to 5.4 percent at the end of 2022 with the new economic model, which is said to reduce the current account deficit.

PER CAPITA INCOME LEAGUE

Before the transition to the presidential system, Turkey’s per capita income was $10,537 in 2017, roughly the same level as the world per capita income ($10,724).
There has been a dramatic drop in Turkey’s per capita income, which shows the average level of well-being of the country’s people, in recent years. After seeing its all-time high of $12,489 in 2013, it declined to $8,612 in 2020. Turkey, which fell from 65th to 77th in the 2013-2020 period, dropped to 81st in 2022.

RISK PREMIUM

The 5-year CDS premium, which shows the country’s risk premium and is fully determined according to market supply and demand rules, was 157 basis points at the end of 2017 before the transition to the presidential system. Currently, the Turkish CDS premium is at the level of 541 points.

DEBT DONE

The central government debt stock was TL 876.5 billion at the end of 2017 and reached TL 4.211 billion according to the latest data.

* When preparing this content, data from the Mahfi Eğilmez website was used.