President Erdogan Credit Kostas Tsironis/Bloomberg
Turkey’s current economic development plan has been brought to the fore with the completion of the first phase of construction of Turkey’s new Istanbul Airport
editor's pickMonday 01, October 2018
Twenty miles outside of Istanbul on the coast of the Black Sea, President Recep Tayyip Erdogan of Turkey declared the completion of the first stage of construction in a gigantic new airport. The project will cover some 76.5 million square metres upon completion, an area greater than the size of Manhattan. By 2020 the airport will look to serve 100 million passengers annually, with a target of 200 million by 2029. The name for the airport was also revealed during the ceremony and will be dubbed ‘Istanbul Airport’.
Upon its official opening, Istanbul Airport, will replace Ataturk Airport, the current main international airport, which Erdogan has said will be shut down and turned into a public garden. “We’ve succeeded in this despite countless provocations, traps and attacks in the past five years,” Erdogan said from a terminal-building stage in the new airport. “We’re creating the infrastructure and targets for our 2053 and 2071 visions,” he added. These two years represent important anniversaries in Turkey, that of the 600th anniversary of the Ottoman conquest of Istanbul, and the 1,000th anniversary of the battle of Manzikert between Ottomans and Greeks respectively. “Turkey’s devoted to becoming a symbol of prosperity and one of the world’s top 10 economies.”
In some ways, the airport is a manifestation of Erdogan’s desire to move the country up the global power rankings. Erdogan’s party, the ruling Justice and Development Party, came to power in 2002 and broadly the project is a symbol of the model for development that has been pursued since the party, and Erdogan, came to power. In a recent report, Bloomberg points to the tens of billions of dollars that have been invested in real estate and infrastructure which has led to the country maintaining a consistent growth rate above five per cent annually since the party came to power.
However, this growth and development has left the country saddled with huge debts whilst it has failed to keep up in other important developmental indicators. Under Erdogan’s reign freedom of press and speech have been sharply curtailed, with measures in transparency and education falling. Furthermore, like the country, the development of the airport project has not been without its issues. Its construction has faced labour disputes, financing challenges, corruption challenges and worker strikes in the face of reportedly disastrous working conditions.
Turkey’s tourism sector took a hit following the attempted coup in 2016 and a series of terrorist attacks. This has led Turkish Airlines to a greater reliance on transit passengers, a key ingredient of the business strategy for the new mega-airport. Ataturk was the fifth largest airport by traffic in 2017 in Europe, following London, Paris, Amsterdam and Frankfurt. The Istanbul Airport will face competition from the other mega-hubs across Europe and the Middle East and only time will tell should it be successful. Turkey’s economy has been hit with serious inflation pressures which has led to severe measures being taken by the authorities to prevent further price increases—including tasking police to check that shops have not increased their prices.
However, in late October pressure on the lira has begun to stabilise, along with pressure on the central bank to continue interest-rate increases. However, as of time of writing inflation currently stands at nearly five times the central bank’s official target of five per cent. Bloomberg has also pointed to key indicators in consumers’ confidence to industrial production pointing to a rapid slowdown in the economy, which will help curb some cost pressures—especially in light of policy makers delivering the biggest rate hike in September since at least 2002.
The overall spike in consumer inflation was brought about due to a destruction in the value of the lira, which lost more than a quarter of its value in August, partly due to a diplomatic disagreement with the US. In addition, the Turkish Statistic Institute revealed that confidence in the country’s economy has fallen by 4.8 per cent month-on-month in October. In a report, the organisation said that the economic confidence index reached 67.5 points in October, down from 71 points in September. “This decrease in economic confidence index stemmed from the decreases in consumer, services and retail trade confidence indices,” the report said. In line with this the consumer confidence index fell 3.4 per cent in October, whilst the services and retail trade confidence indices dropped 4.7 and 1.8 per cent respectively.