Analysts concerned economy may shrink in 2015

Economists forecast that the growth figure for the economy might be negative this year amid rapidly widening political chaos throughout Turkey and signs that the economy has begun to show weakness, a fact that has also been publicly recognized by Finance Minister Mehmet Simsek.
and”The latest developments will most likely not affect the growth forecast positively, but I want to emphasize that while they may affect the economy and markets negatively, we will not allow terrorist organizations to carry out operations in Turkey,and” Simsek said last Monday.
The already depressed lira sunk to 2.78 to the US dollar on Thursday after a series of Turkish air strikes on outposts of the Kurdistan Workersand’ Party (PKK) terrorist organization in northern Iraq have coincided with attacks on Turkish military personnel inside the country by PKK militants.
Turkeyand’s forecasted growth is already less than 3 percent this year, slow in comparison to the rapid growth the country enjoyed in recent years. While growth hit 9 percent in 2010 and 2011, it plummeted to less than 3 percent last year, a figure that is likely to stay roughly the same by the end of 2015.
Sanduleyman Yaiar, economist and former vice president of the Prime Ministryand’s Privatization Administration (andOiB), told Sundayand’s Zaman that Simsek should have realized the worsening situation of the economy earlier and added that the consumer confidence index has steadily declined since May 2014.
According to the Turkish Statistics Institute (TurkStat), Turkeyand’s consumer confidence index fell 2.7 percent, to 64.66 percent, close to the lowest in more than six years.
Yaiar went on to say that the economy might shrink 2 percent in 2015 due to several factors, including the exodus of foreign capital from Turkey, the decrease in the number of tourists visiting the country and the prospects of the continuation of a military campaign against the PKK and the radical terrorist group the Islamic State in Iraq and the Levant (ISIL).
and”The tourists who used to visit Turkey preferred Spain this year. In the first six months of this year, a total of $36 billion worth of foreign investment left the country. In June, the number of tourists visiting Turkey fell by 4.89 percent. The US Federal Reserve might decide to increase interest rates. Against this backdrop, Turkeyand’s economy will shrink in 2015,and” said Yaiar.
Noting that in a recent International Monetary Fund (IMF) report Turkey was cited as having the most fragile economy among emerging economies due the central bankand’s insufficient foreign reserves to finance a large current account deficit and short term debt, Yaiar argued that if the current situation in the economy continues, 2016 will also be lost.
In his column in the Zaman daily on Thursday, veteran economist Seyfettin Gandursel, saying that foreign investments might further decline due to uncertainties in Turkey caused by armed clashes on the southern border, argued that the current economic situation will continue unless a government is formed in the coming months.
The Justice and Development Party (AK Party) has been in negotiations with the Republican Peopleand’s Party (CHP) to form a new government. Yet CHP leader Kemal Kiliandcdaroilu has expressed pessimism about the likelihood of the formation of a government due to disagreements between the parties on several issues, such as limitations on the presidentand’s authority and the electoral threshold for parties to enter Parliament.
h2Failure of foreign policy in ME hit exports deeplyh2 The disintegration in recent years of Turkeyand’s relationships with Syria, Egypt and Libya was a major hit to Turkeyand’s export market, and especially exporters doing business with Arab countries.
The blockage of trade routes passing through Syria due to a civil war ongoing since 2011, Egyptand’s decision to not to renew a roll-on-roll-off (Ro-Ro) agreement with Turkey and Libyaand’s decision to cancel agreements with Turkish contractors not only damaged trade with these countries, but also hit exports to Gulf countries.
Following the non-renewal of the Ro-Ro agreement with Egypt, Turkish exporters trading with Gulf countries were obliged to use the only remaining and costly path of the Suez Canal, where an extra fee of $1,500 per truck must be paid.
Speaking to Sundayand’s Zaman, Mustafa Yilmaz, the owner of a truck fleet in the southern province of Hatay, complained about the rising cost of exporting goods to Arab countries and said that he had never seen exporters — especially shipping firms — in such big trouble in his 35 years of experience as a businessman.
and”There are many vehicles [trucks] but there is no export. We do shipping at cost value.Some banks in Hatay prefer not to give us loans.Iand’ve been in this business for 35 years. I havenand’t seen such big trouble,and” said Yilmaz.
Another truck fleet owner, ibrahim ikiz, maintained that the shipping sector in Hatay will go bankrupt in three months if the current situation with Arab countries continues.
and”In my village, there are some 1,500 trucks which currently remain idle. I cannot pay my debts. How can I pay [my debts] if cannot do business. If I donand’t pay them, [the banks] will seize my trucks,and” said ikiz.
Serkan Sailam contributed to this report.