WWD: Upheaval in Turkey Hits Retail, Tourism
October 21, 2016
By Dene-Hern Chen
with contributions from Nimet Kirac
ISTANBUL – Harun Aslan is wary about predicting the future. This year’s avalanche of bad news has rendered the leather-goods shop owner superstitious.
“Last time, I said this is the worst time for Turkey. I have learned, however, to never say that because something worse can happen,” Aslan recalled. “I said it in June after the airport bombing…and then there was an Army coup.”
His store is about 300 yards from Sultanahmet Square, the site of a suicide bombing on Jan. 12 that left 10 German tourists dead and several others injured. He remembers the day clearly — the resounding explosions, the panic and how a crowd of people ran to the scene of the crime. Aslan stayed in his shop. “I didn’t want to see the bodies,” he said.
Before this year, his store typically brought in about $100,000 a month; today, his revenues are barely $3,000. But Aslan said he is better off compared to his neighbors, many of whom have started laying off employees. Next door is a shuttered restaurant.
This has been a tumultuous year so far for Turkey. The first half was marred by multiple bomb attacks in public areas frequented by both locals and tourists. The second half kicked off with a coup attempt against President Recep Tayyip Erdogan that left hundreds of people dead in the streets. Following the July 15 failed coup, Erdogan’s government has fired, detained and arrested tens of thousands of people en masse in an attempt to weed out supporters of Fethullah Gulen, a Muslim cleric living in Pennsylvania whom Erdogan has pinpointed as the mastermind behind the attempted uprising.
In less than two months, Erdogan’s sweeping purge has seen more than 81,000 people — including academics, judges and civil servants — fired, suspended, or detained while more than 100 journalists have been imprisoned. This makes Turkey the leading jailer of reporters in the world.
As its tourism sector takes a hit — recording some of the steepest declines in arrivals in 22 years — the manufacturing and retail industries are suffering as well, though in less drastic measures. But economists worry about the long-term impact of this year’s continuous bombings set up against a backdrop of growing instability in the region, along with the rhetoric and moves employed by Erdogan’s newly empowered administration.
This perfect storm of bad luck, bad location and bad politics could slow Turkey’s progress as a rising economic powerhouse, said William Jackson, senior emerging markets economist at London-based Capital Economics.
“One of the concerns we have in Turkey is a growing centralization of power in the presidency and an erosion of checks and balances in the political system and arbitrary policymaking,” Jackson said. “That leads to a more unfavorable business environment.”