NEWS ARTICLE        06/03/2023

Has the Turkish economy been in decline ever since the Gezi protests of 2013 ?

The Gezi protests of May 2013 were a watershed moment in Turkish history. The protests, which began as a small environmental demonstration against the proposed redevelopment of Istanbul's Gezi Park, quickly grew into a nationwide movement against the government of the then-Prime Minister Recep Tayyip Erdoğan. The protests were eventually dispersed by police using tear gas and water cannons, but the legacy of Gezi lives on.


One of the most significant impacts of the Gezi protests has been on the Turkish economy. In the years since the protests, many observers have argued that the protests were a turning point for the Turkish economy, marking the beginning of a period of economic decline.


To understand the impact of the Gezi protests on the Turkish economy, it is important to first understand the state of the economy before the protests began. In the years leading up to Gezi, Turkey had been experiencing rapid economic growth. Between 2002 and 2012, the country's GDP grew at an average rate of 5.2% per year, and poverty rates had been steadily declining. One of the key drivers of this growth was a series of economic reforms introduced by the Erdoğan government after it came to power in 2002. These reforms included measures to liberalize the economy, reduce inflation, and increase foreign investment. They were largely successful, and by the time of the Gezi protests, Turkey had become one of the fastest-growing economies in the world.


The Gezi protests had a significant impact on the Turkish economy. In the immediate aftermath of the protests, the country experienced a period of instability, with the Turkish lira depreciating rapidly against the US dollar and capital flowing out of the country. The government's response to the protests, which was widely seen as heavy-handed and authoritarian, also damaged Turkey's international reputation. The protests undermined investor confidence in Turkey. Prior to Gezi, foreign investment had been a key driver of the country's economic growth. However, the government's response to the protests, including its crackdown on social media and the media, suggested to many investors that Turkey was becoming a less stable and more authoritarian country. This, in turn, made them less willing to invest in the country, leading to a decline in foreign investment.


Tourism, which is one of Turkey’s key industries, was the first sector to be affected by the Gezi protests with many tourists cancelling their trips due to concerns about safety and stability. This decline in tourism in 2016 had a significant impact on the economy, particularly in Istanbul, where tourism accounts for a significant portion of the city's GDP.


The protests highlighted underlying economic problems in Turkey that had been masked by the country's rapid economic growth. One of the key issues was income inequality, which had been steadily increasing in the years leading up to the protests. The protesters argued that the government's economic policies were benefiting only a small elite, while leaving the majority of the population behind. This criticism resonated with many Turks, particularly those in the middle and working classes who had not benefited from the country's economic growth.


Finally, the protests had a significant impact on Turkey's political landscape. Prior to Gezi, the Erdoğan government had been widely seen as a model for the region, with many Arab countries looking to Turkey as a source of inspiration for their own political transitions. However, the protests marked a turning point, highlighted as they did the growing discontent with the government's policies and tactics, and gave rise to a new opposition movement. This movement  was diverse, made up of a wide range of groups and individuals with different political ideologies and goals. Some were focused on specific issues, such as environmentalism or LGBT rights, while others were more broadly concerned with the state of democracy in Turkey.


The perceived economic decline after Gezi was compounded by the failed coup attempt against the Erdoğan government on July 15th, 2016, which led to a period of intense political and social turmoil. The government responded to the coup attempt with a massive crackdown on opposition groups and the media, further eroding confidence in Turkey's political and judicial system, and raising questions as to the safeguarding of human rights and freedom of the press.


In the years following Gezi and the failed coup, the Turkişh economy has been in a constant state of turmoil for one reason or another. Inflation has risen sharply, reaching a peak of over 72% in 2022, and the country has struggled to attract foreign investment. The lira has also depreciated significantly against major currencies such as the US dollar and the euro, making imports more expensive and contributing to rising inflation.


The government's response to these challenges has been controversial. In an effort to stimulate the economy, the government has introduced a series of measures that have been criticised by some as populist and short-sighted. These measures have included a massive infrastructure spending program, state guaranteed loan programmes, tax cuts and subsidies for certain industries. The reduction of interest rates in 2021, against accepted monetary policy practice, resulted in a collapse of the Turkish lira. The government has since tried to rectify the situation, but has continued to implement short-term monetary and economic policies as stop-gaps until the up-and-coming elections in May 2023.


Despite the efforts of the government over the last nine months to support the Turkish lira and contain inflation, which is still “officially” over 50%, foreign trade deficit and current account deficits are spiralling out of control, foreign debt levels remain high, net foreign currency reserves are in deficit, and exports are falling.   


It is clear that the government's focus on short-term economic growth has come at the expense of long-term economic stability, and that the country needs to undertake more significant structural reforms if it is to address its economic challenges.

Turkey’s net minimum wage has been raised 49% to TL 17,002 (USD 577) as of 01.01.2024       Migration communication helpline 157 available for foreigners in Turkey       Read our homepage articles on developments in the Turkish economy       Turkey’s official annual inflation rate increases to 75.45% in May 2024       Turkey’s official unemployment rate is 8.6% in March 2024       Read our BUSINESS section for latest sectoral and corporate news       Turkey’s population is 85,372,377 as of 2023 yearend       No. of foreigners visiting Turkey in 2023 increases 10.4% to 49.2 million       Turkey’s private sector foreign debt is USD 164.1 billion as of yearend 2023       Turkey’s economy grew 4.5% in 2023       FDI to Turkey is USD 10.6 billion in 2023       Turkey’s current account deficit is USD 45 billion in 2023