In the past 12 years Prime Minister Recep Tayyip Erdoğan and his colleagues, led by Deputy Prime Minister Ali Babacan have done a great job turning a sick economy into one of the leading 17 economies in the world. Turkey has won good marks for its economic performance at home and abroad.
However, all the success in the past 12 years is mainly because the government engaged in excellent crisis management and then good financial management, drawing huge funds from abroad that has been successfully injected into the economy. Turkey, with its huge domestic market, has based its growth on consumer spending, foreign funds and lucrative banking and construction sectors. Tourism has also been a booster. Turkey has also managed to increase its exports impressively but most of the exported items, like cars, are the products of an assembly industry.
What is really lacking is that the investments flooding into Turkey have not been utilized in the manufacturing sector and have basically gone to "earning money from money," which is counterproductive in the long run.
Turkey has to revamp its economic and industrial structure to base its economy on a sound industry that can manufacture and export.
Turkey is also facing some tough times with the problems in its potential export markets like Iraq, Syria, Egypt and Libya and other Middle Eastern countries where Iraq and Syria were also its export routes.
Add to all this that in a year Ali Babacan will be off the scene, as he has served in Parliament for three terms and cannot be re-elected and thus remain in the helm of the economy where he was so successful.
These are major challenges for Prime Minister Erdoğan who will probably become president on Aug. 10. Erdoğan has seen this challenge and is moving to swiftly convene a major meeting of businessmen to face the issue days before the presidential elections.