It was already anticipated that the last year’s growth figure would be slightly above 5%. However, I think this year’s growth figure will undergo some major revision.
The first quarter figure of 2023 will be most likely around zero. If it weren’t for the economic activity in January, the 1st quarter growth figure would have been in the negative territory. After a similar performance in the second quarter, the country will barely reach 2% GDP growth with the economic recovery and the reconstruction of the earthquake-stricken areas. In the meantime, that inflation will continue to remain at high levels.
Frankly, no matter which political party comes to power, it does not seem likely that they will be able to hike policy rates to a drastically high level.
If both inflation, interest rates and the cost of living rise at the same time before Turkey is recovered from the impacts of the earthquake, the probability of a snap election would increase.
That is to say, a new election may be on the way after the one to be held on 14 May or 18 June. The coalition government had to deal with all the problems following the Marmara earthquake, but all EU accession efforts and other reforms had sunken with the government itself because of a wrong IMF prescription. Therefore, whoever comes to power after the election, the economy will be the most crucial issue that they will have to handle with utmost care.
It should be known that an economic prescription to be implemented without making at least some progress on democracy and structural reforms will be doomed to fail. The quality of democracy will not improve either without ensuring a full and proper implementation of the market economy. Therefore, these components, which are integral parts of each other, must be dealt with in a wise and considerate fashion.