Roasted Turkey

March 28, 2014

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For the last 10 years, Turkey has been a growth miracle. It increased exports by afactor of ten; GDP and per capita income rose threefold. But the cornerstone of that economic success – political stability – is now under threat.

Prime minister Recep Erdoğan isn’t on the ballot in Sunday’s local Turkish elections, but they’re all about him, says Oray Egin. Erdoğan blocked Twitter (the ban was laterreversed), succeeded in shutting down YouTube due to “national security concerns”, has been caught up in a bribery scandal, and was the target of massive protests.

Polls and currency markets are predicting that Erdoğan’s ruling AK Party will win a plurality. Aid of food, clothing, coal, and other necessities has kept support among working class voters strong.

But economically, it’s not enough that the AKP maintain a simple plurality of support.Finance minister Mehmet Simsek says the AKP must win at least 40% of the votes to show that “political stability is not under threat”. Anything less, and the government will lower its 4% annual growth target.

The reality is that figure is probably already fanciful. The WSJ reports that “Turkey’s economic growth is widely projected to drop by half to 2% this year”, government bond yields have hit their highest levels since 2009, and the lira has lost a quarter of its value in the last year.

What happened to the economy lauded by World Bank president Jim Yong Kim as ““an inspiration to many developing countries”? Foreign Affairs’ Daniel Dombey says its down to “a lack of balance in the country’s economy”. Turkey has a current account deficit that’s 7% of GDP, and can’t seem to get away from a reliance on domestic consumption and short-term borrowing.

In those circumstances, when foreign investors begin selling government bonds, as they did in January, even drastic governmental action has limited effect. — Ben Walsh

On to today’s links:

The Wu-Tang Clan’s unique album “mummifies and fetishizes” music – Reuters

Old Normal
High-stakes bowling was huge in the 1960’s, “like poker is today” – Quartz
“Antebellum newspaper humor”: the 19th century’s viral content – Laphman’s Quarterly

Go midwest, insurers. You’ll enjoy Iowa’s favorable regulatory climate – Bloomberg

TurboTax spends millions lobbying against simpler tax returns – Techcrunch

The movie industry “continues to stagger under piracy with mere record-breaking income” – Cory Doctorow

Awful But Informative
Anthony Weiner’s bizarre defense of politicized, protectionist regulations – BI

Pimco’s Total Return Fund trails 87% of its peers so far this year – Jenn Ablan

A guide to calorie-efficient drinking – Wonkblog

Please Update Your Records
Obama is more fiscally conservative than Reagan – Joe Weisenthal

“Fluctuations in the world’s economies are largely due to the stories we hear and tell about them” – Robert Shiller

Data Points
Inflation isn’t just low. It may be falling – WSJ

Tunisia’s deposed president captured a quarter of his country’s GDP – WaPo

New Normal
The latest IPCC report focuses on “resilience and adaptation to inevitable climate change” – Yale

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