Analysis

With Tourism Picking Up, Turkey's Economy Sees the Light at the End of the Tunnel

Turkish economy, and particularly inflation rate, improving fast after a deep 2018 crisis

The Palandoken mountain ski resort next to the city of Erzurum, in Turkey, in 2013.
energeizer / iStockphoto via Get

A two-hour flight from Istanbul and another two hours of overland travel will take you to the site of a great ski vacation in Turkey. The season has already begun and the snow at most high spots is deep enough to ski on.

There are 15 sites offering about 285 kilometers worth of ski trails in the Turkish mountains.

The prices are a joke with a hotel at the Palandoken site considered one of the best in the country offering packages for five nights and six days at a price of 300 euros, including meals and transportation, but lacking a site pass that could run from 20 euros a day to 60 euros for six days. 

At the Hermon, for comparison's sake, a ski pass costs 250 shekels a day and at popular ski resorts in France the prices range from 40 to 50 euros a day.

Skiers from around the world say the service at the Turkish hotels is excellent, which makes the wait time bearable and the crowding less dangerous. Turkey is not considered to be a world pilgrimage site for skiers and snowboarders but in 2019 it hosted six million tourists on ski vacations. This year some 6.5 million tourists are anticipated at the ski sites.

At the pace at which Turkey can develop its vacation resorts, there's no doubt that within two or three years it will fulfill its aspirations to take one of the top spots on the list of preferred ski destinations, just as it has done in the field of medical tourism, especially thanks to the country's hot springs that earned the country a billion dollars last year. The goal is to turn Turkey into the world's second best medical tourist destination by 2023, when the republic celebrates 100 years from its foundation.

Tourism revenue makes up about 12 percent of Turkey's GDP. In 2018 it brought in more than 96 billion dollars to the country. Turkey's Tourism Ministry data shows that some 40 million tourists arrived from January through October 2019, a record number that it aspires to raise another 20 percent this year. The largest chunk of tourists, about 16.5 percent, comes from Russia, followed by Germany, China, the Gulf countries and Iran. These are encouraging figures that bring hope to an otherwise battered Turkish economy which suffered a serious crisis in 2018 from which it has yet to recover fully.

Oludeniz Beach and Blue Lagoon in the Fethiye district in southwestern Turkey, October 2019.
mbond77 / Shutterstock.com

And they aren't the only ones. An International Monetary Fund report released in November pointed to a significant improvement in Turkish economy, including a dramatic drop in inflation from about 25 percent a year and a half ago to 15 percent. Turkey also succeeded in raising its exports enough to lower the trade deficit by 45 percent to about 30 billion dollars.

The fund doesn't support Presidnet Recep Tayyip Erdogan's optimistic growth forecast of about 5 percent, and estimates it will come to only 3 percent but that's still a positive figure relatively to expectations from just six months ago. Nevertheless, the fund cautions that the Turkish economy is fragile in light of large mostly dollar-denominated debts of big corporations involved in production, and due to the absence of an economic plan that could stabilize growth for the mid-to-long-term periods.

The central bank has halved interest rates from 24 percent in July to 12 percent but loans given by banks since then have put them at a liquidity risk, especially the government banks operating under the prime minister's very generous instructions in granting loans to increase economic activity. The problem is that while loans are accessible, Turkish citizens are finding it harder to pay back debts to the banks due to a high rate of unemployment which stands at 13.8 percent and the rising cost of living, which hovered near 10 percent in November.

Turkish President Recep Tayyip Erdogan poses with a prototype of a domestically produced electric car, in Gebze, Turkey, on Friday, December 27, 2019.
AP / POOL

The Turkish economy is not exactly separate from the country's foreign policy which has projected an image of being engaged in constant war, threatening its national security. An example of this are the sanctions the U.S. government imposed on Turkey a year ago when it doubled custom taxes on steel and iron items produced by Turkey, a step which led to losses of 10 billion dollars in a short period of time. The fear of facing more sanctions imposed by U.S. Congress for purchasing Russian anti-aircraft missiles has frozen foreign investment in the country and Turkey's continued military involvement in Syria is already hurting tourism.

Despite the impressive data presented by the Tourism Ministry, it's worth noting that most of the tourists do not hail from Europe or the United States but from Eastern Europe, Russia and China, and their expenditures are significantly less than what western tourists spend. Travel agents have told Turkish media that the main reason for the lower number of tourists coming from the West is concern about security, and that Western tourists avoid Turkey also because of its bad reputation as a violator of human rights.

Erdogan continues expressing optimism and stresses the tremendous potential of the Turkish economy that is turning to new types of production in technology, unseen in the country less than a decade ago. Erdogan may be right in his attitude of mocking the traditional principles of economics to which the IMF and World Bank try to bind Turkey. He himself created an economic miracle 16 years ago when he rescued Turkey from deep crisis. And as we know, miracles tend to defy all logic and rules.