JUDY WOODRUFF: Turkey once boasted that its economy was the star of so-called developing markets. But political uncertainty and increasing terrorism from both ISIS and Kurdish separatists have sent key economic numbers tumbling, and ratings agencies have slashed the country’s creditworthiness.
International concerns about next month’s referendum, which could give President Erdogan greater power, are also contributing to the economy’s decline. And a push to increase Islam’s place in public life is driving some Turks to consider leaving their homeland.
Special correspondent Malcolm Brabant reports from Istanbul.
MALCOLM BRABANT: There’s a touch of desperation about this sign, with its plea for custom. It’s a message that resonates in Turkey. The people in this cafe are tour guides who’ve swollen the ranks of the unemployed.
Among them, Mert Taner.
MERT TANER, Tour Guide: After all those explosions and terror attacks by al-Qaida, ISIS, or PKK, nearly 80 percent of the Anglo-Saxon business, which I’m personally involved in it, people from North America, Britain, Australia, New Zealand, they stopped coming to Turkey.
MALCOLM BRABANT: The slump in tourist numbers is the worst ever. Sheref Aral says that, after the New Year’s Eve nightclub massacre, the outlook has never been more bleak.
SHEREF ARAL, Tour Guide: Every bomb that has happened, I have changed my plan and adapted it to the new situation. But every plan that I did collapsed again one more time.
MORGAN FREEMAN, Actor: If you are one of us, and you want to explore more of this great planet, we are ready to take you there.
MALCOLM BRABANT: Turkish Airlines aired this ad at the Super Bowl, following losses of $463 million in the first nine months of 2016, after turning an $877 million profit the previous year.
MORGAN FREEMAN: Turkish Airlines.
MALCOLM BRABANT: Tourism contributes about 10 percent towards Turkey’s overall national income. It’s a barometer of confidence in the country and crucial for foreign currency earnings.
Nobody is buying at Ertap Tepeyurt’s jewelry store in one of Istanbul’s most popular arcades. But he refuses to believe the economy is permanently hobbled.
ERTAP TEPEYURT, Turkey (through interpreter): Every downturn is followed by an upturn. A large company may collapse, and then it may take a long time to recover. Our hope is that things will eventually be alright. So, because of this expectation, we need to be more patient.
MALCOLM BRABANT: Turkey briefly benefited from the misfortunes of Tunisia and Egypt, whose tourist industries have been wrecked by terrorism. But the impact of contagion is plain to see. And restaurant worker Levent Demir is hoping for an antidote.
LEVENT DEMIR, Turkey (through interpreter): First of all, for things to get better, Syria is critical. Order needs to be restored in Syria, because Turkey is suffering from what’s going on Syria. The circle of fire around us needs to be extinguished.
MALCOLM BRABANT: To make matters worse, Turkish ports won’t be welcoming cruise liners this year. Terrorism and political uncertainty have led ratings agencies like Standard & Poor and Fitch to relegate the country to the lowest investment grades.
In an attempt to bolster the Turkish currency, the lira, President Erdogan made people’s savings an issue of patriotism.
RECEP TAYYIP ERDOGAN, Turkish President (through interpreter): Recently, they started a row on foreign currencies. They say dollar is spiked against the lira. This much, that much, it doesn’t matter. I want to remind my people, my dear people, I love you. Those who keep foreign currency under their pillow should come and turn that into Turkish lira or gold. Let Turkish lira gain value.
MALCOLM BRABANT: President Erdogan has never been reticent about using the term terrorist. And he did so after the Turkish currency dived against the U.S. dollar earlier this year. He said, you know that the economy is being manipulated by those whose objective is to attack Turkey.
He said there is no difference at all between a terrorist who has a weapon in his hand and a terrorist who has a dollar or euro in his pocket. They, he said, use currency as a weapon.
Turkey’s president is bolstered by cheerleaders in the press. Among them, Abdurrahman Dilipak, a columnist with an Islamist tabloid newspaper who we met in the executive suite a at the Istanbul Stock Exchange.
He believes there’s international backing for FETO, an organization accused by Turkey of orchestrating last summer’s coup attempt against President Erdogan.
ABDURRAHMAN DILIPAK, Columnist (through interpreter): We know that behind this FETO movement there is the United States, the CIA, the RAND Corporation. Also, there is the Vatican, Germany, Israel, England, and France. We know.
And, in that respect, manipulation of the economy must be acknowledged. It’s only natural that there should be turbulence in a country which is just recovering from a coup attempt. But some people are fanning the flames. No, this is immoral and unacceptable.
UMIT AKCAY, Economist: Ordinary people feel that they need more economic stability.
MALCOLM BRABANT: But economist Umit Akcay says the key numbers affecting ordinary people are going the wrong way, like unemployment, which now affects 12 percent of the population.
UMIT AKCAY: Inflation is increasing, and, at the same time, the unemployment rate is increasing. It’s especially bad for the young people, because the young unemployment rate is about 20 percent. In 2017, almost all data shows that this trend will continue.
MALCOLM BRABANT: President Erdogan insists that foreign funds continue to flow into Turkey, but other financial experts believe that continuing political uncertainty will lead to capital flight, as happened in Greece, with the wealthy moving their money abroad.
Gokhan Karahan is a consultant at the sharp end of this process, as he helps Turks to buy property in countries that will grant them residency, such as neighboring Greece.
GOKHAN KARAHAN, Consultant: I am having more people that they just need a plan B. There’s a growing concern about their children. Especially young women who have small children who were raised with secular ideas, they’re so much concerned about the future of their country. They want to have some sort of a guarantee for their future.
AYSER ALI, Literary Agent: I just feel surrounded by people that I don’t share anything with.
MALCOLM BRABANT: Literary agent Ayser Ali is alarmed by what she sees as Turkey’s growing abandonment of Western values and is joining the steady trickle of educated young professionals quietly slipping abroad.
AYSER ALI: I’m really sorry to see how hard it is to build a good society with values, and how easy it is to destroy it in a very, very short time.
MALCOLM BRABANT: Ayser Ali is packing up her books to give to friends before moving to Britain.
AYSER ALI: The only thing we can do is just to try somewhere else. I always had even a little spark of hope all the time. But now it’s over.
MALCOLM BRABANT: But Janset Bilgin isn’t leaving. For six years, she ran a small jewelry and furniture store. When business slumped, she decided she either had to close up or invest. She gambled and transformed it into a cafe.
JANSET BILGIN, Business Owner: I know the timing is really bad because the city is very quiet now. Tourists, they don’t come. The locals don’t come, because we’re right in the middle of the city, but the bombings and everything are not too far from here, so people are kind of scared.
I really don’t see a hopeful future. But, on the other hand, we love our country and don’t want to go anywhere.
MALCOLM BRABANT: President Erdogan insists that Turkey is a safe haven for foreign investment. But financial experts warn that Turkey can’t afford economic or political missteps. They fear the present course will only increase the country’s financial troubles.
For the PBS NewsHour, I’m Malcolm Brabant in Istanbul.