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Ahead Of Turkey's Election, Rising Inflation And Weakening Currency Loom

Jun 20, 2018
Originally published on June 20, 2018 6:47 pm
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In Turkey, voters go to the polls Sunday to elect a president and a new Parliament. Five challengers hope to unseat President Recep Tayyip Erdogan. If no one gets a majority, there will be a runoff later. Erdogan has been a dominant and popular figure in Turkey even as his government has cracked down on dissent. But a shaky economy has worried voters and fueled the opposition. NPR's Peter Kenyon reports from Istanbul.

PETER KENYON, BYLINE: Istanbul's commercial centers are still attracting crowds, but there's a lot more window shopping these days. The Turkish lira has lost 20 percent of its value this year, and inflation is rising. That means prices are up, and sales are sagging. In one electronics store, owner Naci Celik sits surrounded by flat-screen TVs and laptops and no customers.

NACI CELIK: (Through interpreter) It's very bad right now. Look; an item that used to cost 3,500 lira is now 4,500 lira. People don't come. They're waiting to buy when the currency gets stronger.

KENYON: But he says re-electing President Erdogan will turn that around. Just outside on the sidewalk, 36-year-old Sibel Cemal isn't so sure. She's out shopping for her children.

SIBEL CEMAL: (Through interpreter) Even the smallest things, clothes that kids want - I can't afford them.

KENYON: But what about after the election? Will things get better then? She shakes her head.

CEMAL: (Through interpreter) It will go on just like it is right now, whatever the results. I see no reason to expect things to get better soon.

KENYON: This is the mood just days before Erdogan stands for re-election. His rivals say fears about the economy are what prompted him to move this vote up by more than a year. Muharrem Ince, the candidate from the main secular opposition party, said at a recent campaign stop that an economic crisis is just around the corner. Heard here through an interpreter, Ince warned that the Turkish lira, having fallen to nearly five to the dollar, could plummet even further.

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MUHARREM INCE: (Through interpreter) It's coming, yes. If Erdogan is re-elected, the dollar will be worth 8 lira, 10 Lira. Our economic truck will hit a wall. Turkey needs new hope, a new president.

KENYON: The current president, Erdogan, remains Turkey's dominant politician, raising fears that he's amassing too much power. But the economy could be a wildcard. Having taken credit for years of growth, Erdogan now blames the currency slump on manipulation by unnamed foreign powers. He's heard through an interpreter.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT RECEP TAYYIP ERDOGAN: (Through interpreter) And I say, hey, financial sector, if you play such games to manipulate our investors and our entrepreneurs, you must know you will pay a big price for it.

KENYON: Erdogan's unorthodox approach to interest rates adds to the risk. Most central banks would raise interest rates to shore up a sliding local currency, but Erdogan insisted on lower rates to spur investment even though that weakened the currency further. Analyst Atilla Yesilada with GlobalSource Partners in Istanbul says overall, Turkey's economy is growing at a fast rate. But at the street level, he says the falling lira and rising inflation are eating up whatever benefits people might see from that growth.

ATILLA YESILADA: Now, we not only import all of our oil but most of our cars, our telephones and even our McDonald's. So the prices of everything that a Turk considers a luxury or a sign of good life has suddenly gone up. As a result, Turks don't really feel the positive impact of growth.

KENYON: Yesilada says the uncertainty might not end Sunday and could possibly drag on through local elections next spring.

YESILADA: The power structure, the question of who will govern Turkey will not be answered until then. And more importantly, the Turkish economy and markets will experience a horrifying rollercoaster ride until then.

KENYON: All of which could add up to a difficult time ahead for whoever becomes Turkey's next president. Peter Kenyon, NPR News, Istanbul.

(SOUNDBITE OF FUSHOU.'S "BORN AGAIN") Transcript provided by NPR, Copyright NPR.