Turkey protests a trigger for economic downturn?

Turkey’s fast growing economy has been the toast of the financial world, there was a recent vote of confidence with a credit rating upgrade from the agency Moody’s as...
Turkey’s fast growing economy has been the toast of the financial world, there was a recent vote of confidence with a credit rating upgrade from the agency Moody’s as shares rose. But even before the protests, questions were being asked about how Ankara would repay its borrowings at six percent of GDP, as the currency  ‘Turkish Lira (TRL)’ was weakening.

Vedat Xhymshiti | between THE frontlines

The street violence triggered a stock market free-fall and the lira plunged. Economists say if the currency stays weak it will mean higher inflation and interest rates. The stellar growth of recent years was already flagging. From 9.2 percent in 2010 to 8.5 percent in 2011, then just 2.6 percent last year. The International Monetary Fund predicts 3.4 percent this year.
The economic good times have fuelled a building boom. The government has been accused of being overly construction friendly. Indeed the spark for the protests was a shopping centre project on what is reported to be the only remaining green space in central Istanbul.
Foreign investors have kept pumping money into Turkey because the government has delivered stability and growth.
One analyst said that was no guarantee that the cash would keep flowing. “What we are seeing does not amount to a Turkish Spring,” said Zsolt Papp at Swiss investor UBP.
“But if a market has had a very good run and investors feel its economy is running out of steam, political instability provides the perfect excuse to sell,” added Papp.

Protests have been held in Turkey since 28 May 2013, dubbed the Turkish Spring by some Western media. The initial Istanbul protests were led by about 50 environmentalists against replacing Taksim Gezi Park with a reconstruction of the historic Taksim Military Barracks (demolished in 1940), with the possibility of housing a shopping mall. The protests developed into riots when a group occupying the park was attacked, with tear gas and water cannons, by state police. 

The subjects of the protests have since broadened beyond the development of Taksim Gezi Park, developing into wider anti-government demonstrations. The protests have also spread to other cities in Turkey, and protests have been seen in other countries with significant Turkish communities. Prime Minister Recep Tayyip Erdogan gave a number of speeches widely seen as inflammatory and dismissive of the protestors, and on 3 June left the country on a planned 3-day diplomatic to
ur of North African countries, a move that has been criticized as irresponsible by opposing political leaders. On 3 June unions announced strikes for 4 and 5 June.
The range of the protesters was noted as being broad, encompassing both right and left-wing individuals. The protesters’ complaints ranged from the original local environmental concerns to such issues as authoritarianism of Prime Minister Recep Tayyip Erdoğan, curbs on alcohol, a recent row about kissing in public, and the war in Syria.
Istanbul mayor Kadir Topbaş stated that the environmental campaign had been manipulated by “political agendas”. According to various news outlets, the clashes are one of the most challenging events for Prime Minister Recep Tayyip Erdoğan’s ten-year rule.
On 31 May 2013, police suppressed the protesters with tear gas, arrested at least 60 people and injured hundreds. The police action received wide attention online. Protesters organized and gathered on İstiklal Avenue, reaching thousands on the night of 31 May.
According to government sources, more than 1700 people have been taken into custody, with more than 200 demonstration in 67 provinces, including Istanbul, Ankara, İzmir, Antalya, Konya, Eskişehir and many others. So far, two people have been killed.

On 4 June, prime minister regent Bülent Arınç apologized to the protestors for the “excessive violence” used by the police and announced that the government will ensure full participation of locals to local constructions and developments forth.

SOURCE: EuroNews, IMF, CNN, Al Jazeera

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