On April 16, a constitutional referendum on the transition from a parliamentary form of government to a presidential one was held in Turkey. Following the referendum, Turkish President Recep Tayyip Erdogan said that the decision taken by the citizens of Turkey on the transition to the presidential system was a historic one, and this is the most important reform in the history of the country. The legitimacy of the vote has been challenged by opponents of the government, sparking a fierce war of words, and on the international stage what’s happening in the country isn’t doing Turkey any favours, the British Independent writes in its article We need to stop being hysterical about President Erdogan – he is not all Turkey has to offer.
After the vote, Erdogan repeated that he intends to review Turkey’s suspension of the death penalty, something that could well be a final nail in the coffin for the country’s half-century-long ambition of EU accession. Add to the mix that Turkey is at the epicentre of a historical migrant crisis. Ten year ago we associated the country’s beaches with boozed-up Brits on package holidays. Now we associate them with rubber dinghies under cover of darkness. It’s not easy to sell Turkey, neither as a tourist destination nor as an investment case. The currency is hitting a fresh record low every time I look and has depreciated more than 27 per cent against the dollar over the last year. Interest rates have been jacked up by hundreds of basis points this year alone. Alarm bells are certainly ringing but the country is not about to default. This is not Argentina or Ukraine or Greece.
The IMF forecasts economic growth of 2.5 per cent for the country this year and 3.3 per cent next. That’s not quite the above four per cent the government itself is predicting, but – just for context – the IMF thinks the eurozone economy will grow by 1.7 per cent in 2017 and the UK by two per cent. And yes, an emerging economy would naturally be expected to have a faster growth rate than a developed economy or region, but not one that’s on the cusp of collapse. The index of the 30 biggest stocks listed in Istanbul has risen more than seven per cent over the last year, partially as a result of the crashing lira, but Turkey is the EU’s fourth largest export market and the fifth largest provider of imports to the bloc. Turkey’s banks, which account for almost 40 per cent of that stock index, remain well-capitalised and Moody’s assigns a Ba1 credit rating to its sovereign debt. That qualifies as junk but it’s still 10 notches above what’s considered to be a default. Standard & Poor’s and Fitch have it at BB and BB+ respectively, in the same ballpark and a far cry from bankruptcy. The country can still borrow money on international markets. Investors still hold Turkish assets.
Geopolitical risk is sky high, and the future is about as clear as a room full of tightly packed Anatolian whirling dervishes, but through it all there is a case for buying into Turkey – financially or otherwise – at some point in the future.
And now perhaps more relevantly for most of us, the hoi polloi of cash-strapped, sun-seeking, holiday-starved tourists: Turkey is beautiful, largely safe in places where you would want to holiday, deeply welcoming and culturally one of the richest places in the world. The UK Foreign and Commonwealth Office advises against travel to within six miles of the border with Syria and to Diyarbakir, the city at the centre of a bloody conflict between the government and Kurdish insurgent groups, but also says that it’s “generally” safe to travel to the country.
The UK Government warns of “a high threat from terrorism” following a string of attacks in Turkey, but the same warning applies to France, Germany, Belgium, Australia, Russia and dozens of other countries. Despite the weak pound against a lofty euro, we don’t think twice about hopping on a flight to Paris or Berlin for the weekend. Or getting on the Tube in London. We live in a world where terrorism has become commonplace, economic distress and market turmoil the norm, and world leaders profoundly and terrifyingly divisive. But we must stop reducing countries to their faults. Not the UK, not the US and certainly not Turkey.
