ANKARA: Turkey faces the prospect of waning economic growth, a struggle to attract international investors and financial market volatility for months to come following the failed coup against Turkish President Recep Tayyip Erdogan. The attempted coup and the subsequent tough response by the government that’s seen more than 6,000 people arrested could accentuate toxic political divisions in Turkey and weaken the institutions and respect for the rule of law that are central to the proper-functioning of a market economy.
Images of warplanes firing on key government installations, tanks rolling into major cities and news of at least 232 people killed are hardly the backdrop to entice international investors, who are badly needed for the financing of Turkey’s sizeable current account deficit, which stood at around 4.5 per cent of the country’s annual gross domestic product in 2015.
The same applies to those looking to holiday in Turkey – a key sector and foreign-currency earner for Turkey. Tourist numbers this year, particularly from Europe, were already expected to be sharply lower before the attempted coup as a result of a series of attacks in the country over the past few months.
Worries over Turkey, which stands at the crossroads between Europe, the Middle East and Asia, are something the global economy could do without, to keep in mind alongside such things as China’s economic slowdown and the implications of Britain’s exit from the European Union.
“The near-term economic impact of Friday night’s attempted coup will depend on the length and severity of market dislocation, but at the very least the economy is likely to suffer a period of slower growth, and the lira will remain under pressure,” said William Jackson, senior emerging markets economist at Capital Economics. Before a full assessment of the impact of the attempted coup, most economic forecasters had pencilled in Turkish growth of around four per cent this year.
