It was actually a routine appearance for Turkish President Recep Tayyip Erdogan last weekend in Samsun, a city on the Black Sea. The region is Erdogan’s home, that’s where he’s at home, that’s where he always got full support. At least so far.
Now there are more and more signs of nervousness. Erdogan is not sure of victory. He evoked in Samsun the very first success in which women had played an important role.
The new AKP women from back then, often with headscarves. They went door to door, asking for votes from frustrated pensioners, housewives, conservatives and the religious. With success. Erdogan wants to back women this time too. “Don’t leave any apartment unvisited. A castle can be conquered from the inside, who can do that? Yes, you women.”
The President further said: “With your support, which we ask for for the last time, we will usher in the new Turkish century and then hand over the ‘blessed’ baton to our youth.”
Apparently, Erdogan also wants to win back those who have turned their backs on the ruling AKP party in recent years because of the tense political and above all because of the poor economic situation. Now, for the last time, he asks her to trust him. He needs her.
Because Erdogan is under pressure. The rise in inflation never ends; even if it has not risen further for the first time in a year and a half, it is still alarmingly high at over 84 percent. Many of his constituents suffer as a result.
And he knows very well that rising prices could cost him his power. Because he owes his success to a similar economic crisis. When the economy slumped in 2002, his AKP, founded just a year earlier, emerged victorious. At that time, she achieved an absolute majority from the start.
Inflation is now very high again, at just under 85 percent according to official figures. ENAG, an independent group of scientists, calculates it to be even more than 170 percent. A huge increase, especially in the last year.
A year ago, Erdogan introduced his economic model, with which he wanted to bring more investments into the country through a low interest rate policy, stimulate the economy and fight inflation. It failed miserably. Nevertheless, the Erdogan-loyal central bank continues to lower the key interest rate, most recently to nine percent, although with this inflation it should do the opposite and raise it drastically.
The existential fear of many households is great. Despite work, many people cannot even meet their basic needs. Social media is full of calls from citizens asking for donations and support. Almost half of the employees in the country work for the minimum wage, which is currently the equivalent of just 300 euros net per month. Anyone who receives their salary exchanges it immediately for dollars or euros. The fear of the further depreciation of the lira is great.
The exchange rate is also a major concern for German companies in Turkey. According to the current autumn survey by the German Chamber of Commerce Abroad (AHK), it continues to be rated as the greatest risk factor at 74 percent.
This was followed by the general economic conditions with 71 percent. In spring it was only 56 percent – a significant deterioration. 64 percent of the German companies on the Bosporus also expect worse economic development. In the spring survey, it was still 51 percent.
On the other hand, 60 percent of those surveyed still consider their business situation to be good, despite the tense situation in Turkey. 38 percent rate them as satisfactory, in the spring it was 25 percent. Only two percent of German companies think their business situation is bad.
The subdued economic and business expectations are clearly slowing down the employment plans of German companies. Only 22 percent plan to hire new employees. In the spring it was 39 percent. 16 percent of the companies surveyed even assumed job cuts. In the penultimate survey, it was only six percent. The majority of companies, 62 percent, assume that the level of employment will remain the same.
Apparently, Erdogan’s economic model has not convinced German companies when it comes to investments. 34 percent stated that they would even reduce their investments. In the spring it was only 25 percent. 19 percent are not planning any investments at all, although the majority of German companies still consider Turkey to be an attractive location.
Thilo Pahl, Secretary General of the German-Turkish Chamber of Commerce, said in an interview with DW that only ten percent of those surveyed expect the Turkish economy to improve in the next twelve months. According to him, more and more German companies in Turkey are now feeling the effects of the Ukraine war. You would get fewer orders from Europe.
The unpredictability of Turkish economic policy is also a factor that makes German companies more insecure. The compulsory exchange of companies’ export earnings was introduced overnight at the beginning of the year. First, 25 percent of the revenue in euros, US dollars and pounds had to be exchanged for lira. In the spring, this was increased to 40 percent. “What if we wake up one morning and maybe the government has increased compulsory conversion to 75 percent? ‘ Pahl asks, adding that this worries German companies.
Germany is Turkey’s largest trading partner. According to the Turkish statistical authority, most exports from the country go to Germany. From January to October this year, exports increased by ten percent, the trade volume reached 17.5 billion dollars. When it comes to imports, on the other hand, Germany is in fourth place. The country purchased 8.1 percent more goods from Germany in the first ten months. This corresponds to a trading volume of 19.3 billion dollars.
Pinar Ersoy, President of the AHK Turkey, gives another reason that worries the companies: the sanctions against Russia and the consequences. “Both Turkish and German companies are watching developments very closely,” Ersoy told DW. This further depressed the mood.
The German Chamber of Commerce Abroad conducts a survey among German companies abroad every six months. In Turkey, 80 out of 346 companies took part in the current autumn survey. 45 percent of the companies surveyed employ more than 1,000 people, 29 percent between 100 and 1,000, 26 percent fewer than 100. According to the Federal Foreign Office, there are around 7,700 German companies or Turkish companies with German capital in Turkey.
Autor: Elmas Topcu, Aram Ekin Duran
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The original of this article “German companies want to invest less” comes from Deutsche Welle.