President Recep Tayyip Erdogan has claimed victory in Turkey's hotly contested but controversial referendum on introducing an executive-style presidency with sweeping powers. The razor-thin victory for Erdogan’s Yes camp in the referendum now raises difficult questions over Turkey’s near-term political and economic outlook as well as its relations with the EU.
The government is arguing that the executive presidential system will bring better management of the economy through a more effective and faster decision-making process.
In the wake of the failed coup attempt, the government has announced several measures to boost investment and domestic demand. The latest GDP data suggest these efforts may be paying off. The economy rebounded from its slump in the third quarter of 2016 with GDP expanding at 3.5% in Q4.
In light of the better-than-expected data, Moody’s Investor Services revised up its 2017 GDP growth forecast for Turkey to 2.6% from the previous 2.2%.
The rating company, however, warned that Turkey is unlikely to be able to sustain a better growth performance without key reforms.
Indeed, the data released after Sunday April 16 vote were not promising, Turkey’s unemployment rate hit 13% in January while the central government budget deficit tripled in March. Sticky inflation and a high current account deficit are other dilemmas facing the Turkish economy.
However, the government is likely to be more preoccupied with the domestic political agenda in the short term rather than the economic reforms. Parliament will be busy in the next six months harmonising existing legislation with the new constitution.
Outside Turkey, the reaction from the international community to the referendum has been mixed. US President Donald Trump and Russia’s Vladimir Putin congratulated Erdogan on his victory. European leaders have remained largely silent, but European lawmakers call for a review of relations with Turkey.
Meanwhile, the government continues its crackdown on suspected Gulen supporters whom it says masterminded the botched putsch. 9,103 police officers were suspended from duty and more than 1,000 people were detained.
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