In the rapidly changing agenda of our fair country, President Recep Tayyip Erdoğan points to robust growth in the first quarter of 2021. The official figures will be announced on Monday, but a strong growth performance after the negative impact of COVID-19 in Q1 2020 figures will not be a surprise.

Turkey already grew in 2020, and many of its leading indicators aren’t looking bad in 2021. Not only in Q1 2021 growth, but the growth rate in 2021 as a whole could easily surpass 6 percent. This could mean that the 2020-2021 growth rate could be an average of more than 4.5 percent, so about Turkey’s average long-term growth rate.

You may then ask why one-third of Turkey’s young generation is still unemployed. That is about the government’s response to the turmoil in the Turkish economy. It started in 2018 and is still continuing with the pandemic.

According to World Bank’s April 2021 Turkey Economic Monitor, the incidence of poverty in the country has declined by 77 percent between 2003 to 2018 but then increased by 10.2 percent in 2019, which means that 1.5 million people fell below the poverty line that year, bringing that total to 8.4 million people. Why? Because the 2018 turmoil in the Turkish economy hit the lowest income households the hardest.

Then the virus came, the measures we took to prevent its spread again hit the poor the hardest. The major policy response has been a 16 percent jump in bank loans between 2020 to 2021. Despite the decline in electricity consumption from 2020 to 2021, car sales jumped by 92 percent and home sales increased by 97 percent. It seems that the Turks were selling previously built homes and previously assembled cars to each other during the pandemic, all thanks to a rapid credit expansion.

That is why the youth unemployment rate was around 25.3 percent, which of course, only counts people who are still actively looking for a job. If you add young people who have lost hope of finding one, that figure rises to 36.5 percent in the first quarter of 2021. Hence one-third of our young people are still unemployed, watching as everybody else furiously swaps homes and cars on borrowed money.

Why this buoyant demand then? People who can afford can have easy access to bank loans, domestic foreign exchange deposit accounts and have their own homes already. The depreciation of the Turkish Lira against the dollar and the rise in the prices of homes and cars due to credit growth led to a positive wealth effect feeding domestic demand. That’s why there is really no need for a more expansionary monetary policy.

Sustainability from now on depends on two issues, if you ask me. The first is the speed of the vaccination process. Currently, Turkey has vaccinated 19.4 percent of its population. The same figure is around 49.4 percent in the United States, 41.5 percent in Germany, 37.4 percent in Spain, 32.3 percent in Greece and 1.8 percent in Egypt. The faster the vaccination, the faster the recovery, especially in a country like Turkey, which relies heavily on tourism revenues. The second main factor is the Central Bank’s policy credibility. The swifter credibility can be recovered, the more sustainable the recovery. No credibility, no gain.

A key feature of Turkey’s growth over the last two decades has been the inclusiveness of its growth process. That has changed, especially since 2018. The rift between the haves and have nots is widening at an alarming rate. The current policy mix, undoubtedly, is working for a few and not many. It may be possible to maintain that for some time, but we live in a very rebellious age. If you don’t listen to the voices of the many, they will speak up, louder and louder. Of all people, the people in this government should know that.

This commentary was published in Hürriyet Daily News on 29.05.2021