Business in Turkey unruffled by looming election
Friday, 20 July 2007
ISTANBUL, July 19 (AFP): General elections in Turkey are usually a time of economic jitters, but markets, business and analysts, confident in the economy's new-found stability, remain cool ahead of Sunday's vote, convinced that the current administration will stay on.
Last week, the Istanbul Stock Exchange hit record highs, its IMKB-100 main indicator gaining 4.39 per cent in five trading days to reach an all- time high of 52,086.68 points.
In a report to its clients, the Ak Yatirim investment bank predicted a further 15 per cent increase to 57.650 points if it is correct in its forecast for Sunday's elections.
Ak Yatirim said it expected the governing Justice and Develoment Party (AKP) -- rooted in political Islam but describing itself as simply "democratic conservative"-to obtain 39.4 per cent of the vote and 302 of the unicameral parliament's 550 seats.
"Financial players are enthusiastic because they are counting on an AKP majority government that will pursue the economic policies of the past five years and maintain economic stability," explained economist Ahmet Insel from Istanbul's Galatasaray University.
"The AKP has a liberal economic policy that pleases the players because it keeps the budget, inflation, salaries and public spending under control," he said.
Murat Yalcintas, chairman of the Istanbul Chamber of Commerce, said he did "not expect much change as far as the government is concerned," and did not hide his pleasure at the prospect.
Whatever happens, he said, the new government will have to pursue its predecessor's path of a liberal economy targeting full membership with the European Union and continuing to enact the reforms this requires.
"Thanks to government policies, Turkey enjoyed a growth rate of around 7.0 per cent a year over the past several years," Yalcintas said. "In 2006, we obtained 20 billion dollars (14.5 billion euros) in direct foreign investment-more than in the 20 years from 1980 to 2000 combined. This must continue."
Furthermore, from 2002 to 2006, inflation dropped from 29.7 per cent to 9.65 per cent and the national debt from 78 per cent to 54 per cent of gross national product, while the budget deficit was restricted to 0.7 per cent last year.
Umit Boyner, vice-president of Turkey's powerful TUSIAD business association, said there was no viable alternative to a new AKP government.
"The MHP and the CHP are essentially playing on nationalism and xenophobia and have no clear plan for the future of Turkey," she said.
She was referring to the main opposition Republican People's Party (CHP) and the far-right Nationalist Action Party (MHP), the two other political groups expected to overcome a 10 per cent national threshold to gain parliamentary seats, according to the Ak Yatirim report.
Boyner appeared unfazed by the prospect of renewed political tensions if the elections produce another AKP government.
An inconclusive presidential vote had millions of secular Turks in the streets countrywide in April and May in protest against what they saw as a secret AKP agenda to surreptitiously transform the country into an Iran-style Islamic republic.
To aggravate the crisis, the army threatened to intervene if the government failed to act to preserve the secular regime.
"Structural change and tight monetary policy have made Turkey much more resilient to turmoil on the political scene," Boyner said. "I see no problems there."
"For the first time in a very, very long time, a political crisis in Turkey had absolutely no effect on short-term macroeconomic indicators," economist Insel said, commenting on the events in May.
"After the election, with the government's legitimacy reinforced, the economy will be even more resistant to political crisis."
Last week, the Istanbul Stock Exchange hit record highs, its IMKB-100 main indicator gaining 4.39 per cent in five trading days to reach an all- time high of 52,086.68 points.
In a report to its clients, the Ak Yatirim investment bank predicted a further 15 per cent increase to 57.650 points if it is correct in its forecast for Sunday's elections.
Ak Yatirim said it expected the governing Justice and Develoment Party (AKP) -- rooted in political Islam but describing itself as simply "democratic conservative"-to obtain 39.4 per cent of the vote and 302 of the unicameral parliament's 550 seats.
"Financial players are enthusiastic because they are counting on an AKP majority government that will pursue the economic policies of the past five years and maintain economic stability," explained economist Ahmet Insel from Istanbul's Galatasaray University.
"The AKP has a liberal economic policy that pleases the players because it keeps the budget, inflation, salaries and public spending under control," he said.
Murat Yalcintas, chairman of the Istanbul Chamber of Commerce, said he did "not expect much change as far as the government is concerned," and did not hide his pleasure at the prospect.
Whatever happens, he said, the new government will have to pursue its predecessor's path of a liberal economy targeting full membership with the European Union and continuing to enact the reforms this requires.
"Thanks to government policies, Turkey enjoyed a growth rate of around 7.0 per cent a year over the past several years," Yalcintas said. "In 2006, we obtained 20 billion dollars (14.5 billion euros) in direct foreign investment-more than in the 20 years from 1980 to 2000 combined. This must continue."
Furthermore, from 2002 to 2006, inflation dropped from 29.7 per cent to 9.65 per cent and the national debt from 78 per cent to 54 per cent of gross national product, while the budget deficit was restricted to 0.7 per cent last year.
Umit Boyner, vice-president of Turkey's powerful TUSIAD business association, said there was no viable alternative to a new AKP government.
"The MHP and the CHP are essentially playing on nationalism and xenophobia and have no clear plan for the future of Turkey," she said.
She was referring to the main opposition Republican People's Party (CHP) and the far-right Nationalist Action Party (MHP), the two other political groups expected to overcome a 10 per cent national threshold to gain parliamentary seats, according to the Ak Yatirim report.
Boyner appeared unfazed by the prospect of renewed political tensions if the elections produce another AKP government.
An inconclusive presidential vote had millions of secular Turks in the streets countrywide in April and May in protest against what they saw as a secret AKP agenda to surreptitiously transform the country into an Iran-style Islamic republic.
To aggravate the crisis, the army threatened to intervene if the government failed to act to preserve the secular regime.
"Structural change and tight monetary policy have made Turkey much more resilient to turmoil on the political scene," Boyner said. "I see no problems there."
"For the first time in a very, very long time, a political crisis in Turkey had absolutely no effect on short-term macroeconomic indicators," economist Insel said, commenting on the events in May.
"After the election, with the government's legitimacy reinforced, the economy will be even more resistant to political crisis."