MYTHS ABOUT THE TURKISH ECONOMY

The Justice and Development Party, nay, Recep Tayyip Erdogan, came to power at the end of 2002. For more than a decade, Mr. Erdogan (R.T.E.) has been ruling the country as “one man.” There...
The Justice and Development Party, nay, Recep Tayyip Erdogan, came to power at the end of 2002. For more than a decade, Mr. Erdogan (R.T.E.) has been ruling the country as “one man.” There is a widespread rhetoric that Turkey has been showing a miraculous level of economic development during the 10 years under R.T.E. This rhetoric is not just prominent in Turkey but elsewhere too. Is this a true statement or a myth? I would like to dissect this argument from a critical viewpoint today.

by Ege Cansen

     Vedat Xhymshiti | between THE frontlines

Myth #1: Per capita income has increased by threefold.
Wrong. The truth is that per capita income has increased by 45 percent in 10 years. The math behind the “threefold increase” is in fact a translation error caused by using the current exchange rate of the U.S. Dollar. National income and growth rates are calculated by using the country’s national currency. Whether the national currency appreciates or depreciates against the U.S. Dollar does not affect the growth rate. For example, whereas 100 Japanese Yen was equal to 0.94 Dollars on June 9, 2008, it increased to 1.32 Dollars on October 24, 2011. In other words, the Japanese Yen appreciated by 40 percent against the Dollar and the Japanese per capita GDP –which in reality did not show much increase—increased by 40 percent when calculated by using the Dollar’s current exchange rate. No Japanese Prime Minister has bragged about it, however.
Myth #2: Our gross national income has increased speedily during the 10 years
Wrong. The average growth rate of the last 10 years has been 5 percent. This is roughly equal to the average growth rate of the 80 years prior to this period. Nothing has changed. Growth is fixed to five percent for three years in order to prevent the increasingly flaccid current account deficit from inducing a devaluation crisis.
Myth #3: The Turkish economy became the 17th largest economy in the world
It did not, because it always has been. Even in 1993, Turkey was the 17th largest economy in the world with its gross national income. Sometimes it moved up along the scale one notch, sometimes it moved down. Turkey’s ranking has not changed 19 years later, in 2012. In other words, it is the world’s 17th largest economy. This will not change in the next 10 years either.< /span>
Myth #4: We zeroed out the IMF debt, we became a debt-free country
This is the epitome of lying with incomplete statements. The most unsuccessful outcome of the AKP’s economic policies is the enormous increase in foreign debt. (On the other hand, this is the reason why the myth started off in the first place.) Our foreign debt has increased from 130 billion Dollars in 2002 to 337 billion in 2012. The trend continues. Our country has never incurred this much foreign debt at any point in history. The IMF debt has been cleared by borrowing funds from foreign banks as their due dates approached. This is all that there is to it.
Epilogue: Myth, enchantment. 
(SOURCES: IMF, World Bank, Turkish Central Bank)

Enter your email address to subscribe to THEFrontliner.net and receive notifications of new posts by email.

RELATED BY