Turkish President Recep Tayyip Erdogan’s economic strategy looks like it has just been vindicated, with a little help from one of the largest statistical revisions in the country’s modern history.
Following the release of reworked gross domestic product data series by the country’s statistics agency, Turkstat, this week, the Middle East’s largest economy now appears to have expanded much faster than initially thought in the years after the financial crisis.
Given that in those years the debate about policy in Turkey was dominated by Erdogan’s more unorthodox take on economics, this is being interpreted as a boost to the president and his allies.
Their counter-intuitive stance has argued that higher interest rates will only help accelerate Turkey’s chronic inflation problem and that external imbalances are not a reason to avoid lowering lending costs. Inflation came in at 7 percent last month.
Those ideas were long thought to be counter-productive in comparison with Erdogan’s first five years in power when market-oriented reforms defended by earlier statesmen and better ties with European allies allowed Turkey to achieve turbo-charged growth. According to the same narrative, the pace of expansion has sharply come down since the peak of the financial crisis due to the policy backlash spearheaded by the president himself.
That theory, widely held among some of Turkey’s most respected economists, isn’t backed by the new set of figures from Turkstat. GDP rose by an average 5.7 of percent since 2009, compared to 7.1 percent during the first five years of Erdogan era. Before Monday’s revisions, the gap was much bigger with estimates for the same periods at 3.8 percent and 6.8 percent, respectively.
“They are naturally going to use this in future economic debate, arguing that they are already doing the right thing,” said Cem Baslevent, a professor of economics at Istanbul’s Bilgi University. “Formation of new policy can’t be based” on the assumption that there is no need for further reforms.