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The Kapali Carsi

Turkey: The economic consequences of #OccupyGezi

In my latest Hurriyet Daily News (HDN) column, I go over the economic consequences of the Turkish protests. You can read the whole thing at the HDN website, but basically it all boils down to whether Erdogan will take a step back or not. Not that the demands of the protesters are unreasonable, but he is, for some reason, not backing down.

Since it was tough to fit everything into 3000 characters (a little bit more than 500 words), my HDN limit for the hard copy, so I need to make an additional point on FDI:

I wrote a slightly longer version of the column at the Financial Times beyondbrics blog, and I noted the following there:

But even if the last weekend had not happened, any potential investor would still think twice after learning what Diageo went through: The British alcoholic beverages company bought local producer Mey for $2.1 billion in 2011, only to see sharp tax hikes and more recently new laws restricting the sales and consumption of alcohol. An unstable regulatory environment is not exactly an FDI magnet.

Finally, note that there are a couple of interesting points on Turkish stocks at a recent Economonitor post of mine.

BTW, after the sharp falls in Turkish assets on Monday, there was huge demand for this topic, and me as a Turkey economist, I had seven interviews on Tuesday. Here are two: CNBC and one of my three or four BBC ones.

And over at FT beyondbrics, my good friend Atilla Yesilada wrote about the same topic, making more or less the same points as me, while Standard Bank’s Tim Ash discussed what would happen if Erdogan was gone (nice wordplay).

Interest on the economic consequences of the Turkish uprising seemed to die down on Wednesday, as markets seemed to be on the way to a slow normalization on Tuesday, but then reignited on Thursday, especially after Turkish stocks plunged after Erdogan repeated his hardline stance in Tunisia. For example, the BBC and NYT articles summarized the picture well. I particularly liked the NYT one for the following words:

For more than two years, a very small subset of investors and economists has warned that, as with other economic booms built on a mountain of debt — like the property spikes in Japan in the 1980s and more recently in the United States, Spain, Ireland and other European countries — the one in Turkey would reach a painful end.

As loyal readers would know, I am part of that small subset, so I felt vindicated by those remarks.  I also liked the emphasis on the housing boom, a topic I have written about several times, for example a few weeks ago and last summer.

And I liked the BBC article as well, especially since they were inspired by one of my graphs at FT. In fact, they asked Turkey Data Monitor, my Turkish data program, about the data and the folks at TDM called me to ask how I had calculated it.

Anyway, I am waiting for Erdogan’s plane to land, as the sultan is returning from his Rainbow Tour (they equate Peron Erdogan with Mussolini. Can’t think why). I don’t expect him to make any reconciliatory remarks, especially since a large crowd of his supporters is waiting for him. But I don’t expect him to make matters worse, either: After all, you can’t go lower than ground zero!:)…

Update: The Erdogan crowd is getting larger by the minute, whereas there is a huge protest group in Taksim- proof of the degree of polarization in the country. Are we getting into civil war? OK, that’s an exaggeration, but as Axl said, “what we have is failure to communicate”. “Look at the hate we’re breeding Look at the fear we’re feeding” OK, I am getting pessimistic, and worse, I am making you pessimistic- so I’ll just stop and go to bed- it is past 1am in Turkey. But I’ll post tomorrow and over the weekend if there is a major development…

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