Turkish economy, democracy face tough tests

It is not easy for anyone to endure so many terrible things as have been happening in Turkey, from terror attacks to coup attempts. In just the last 12 months, the country has seen a total of 14 deadly terrorist attacks. Only 17 days after the suicide attack at the Atatürk Airport, the coup attempt took place and fortunately failed. Then at least 54 people were killed and dozens more were wounded in another suicide attack at a wedding ceremony on Aug. 20 in the southeastern province of Gaziantep. The military operation into northern Syria alongside coalition forces against the Islamic State of Iraq and the Levant (ISIL), which started early on Aug. 24, followed these tragedies.  

I’m not even mentioning the rising fears of growing authoritarianism here, or other concerns. 

In Turkey, which has become something like a turbulent “latest news” republic, the coming period will be crucial for maintaining a solid democracy and strong economy. Both are facing quite tough tests. 

In terms of democracy, the sustainability of the recent feeling of togetherness among most parts of society is of great significance. The leaders of three parties at parliament have agreed to undertake a partial change of the constitution in order to strengthen the independence and impartiality of the judiciary after the failed coup attempt. The Peoples’ Democratic Party (HDP) has also expressed support for the deal between the other parties, and a resolution of the Kurdish question will certainly be crucial.  

The economy still seems to be more or less on track, despite continued fragilities, mainly thanks to the robustness of its fundamentals, relatively high growth rates, and healthy public finances. 

Turkey’s stocks, bonds and currency have also recovered more than half of their losses that followed the coup attempt. There has been no notable drop in bank deposits and no restrictions on capital movements. 

This shows that there is still hope for Turkey. Indeed, despite everything Turkey remains one of the most vibrant economies in the region. Following the failed coup attempt, by fostering a more tolerant tone and giving all parts of society the same room for maneuver, the current unique situation could be used for the benefit of the country going forward. 

In recent years Turkey has suffered serious problems regarding the rule of law and the low quality of institutions. Turkey is more or less a market economy, and investors are now in a wait-and-see situation over what will be the result of the current state of affairs. There are two possible paths for the country to go down: Becoming a chaotic country or a land of peace, strengthened by solid institutions and the rule of law. If it chooses the latter, Turkey could start to make serious investments again, both from domestic and foreign companies. 

Before concluding, let me highlight one of the weakest links of the economy. Turkey is one of those countries where labor productivity is very low. I bet these levels have dipped even further recently, as we have all faced dozens of shocking incidents for months. Let me also again mention the urgent need for educational reforms. 

All the recent abnormalities have hit the Turkish people’s creativity and productivity, which is one of the basics of a healthy economic growth. As U.S.-based academic Selçuk Şirin mentioned in a daily Hürriyet column last month, according to a joint study by Intel and Bright Future just 14 percent of the Turkish people “imagine.” Among children, more than half do not even know how to “imagine,” Şirin noted.
 
Turkey would be able to pass its many tough tests if it was first able to “imagine” better and then realize these ideas.