Then why did Moody's raise Turkey's sovereign credit rating this week? Your statements are not consistent with the facts.
Erdogan basically created a huge consumption bubble in Turkey and it burst in early 2011.
Sure the economy is growing slower than it was, but Turkey's economy still is growing at the fastest rate in Europe. Burst bubble? Don't see any sign of it. Why does Turkey still have a sovereign debt that is only 40% of GDP? By no means am I suggested that a rapidly growing economy will grow rapidly forever, but I find it hard to believe that anybody who is paying attention to Turkey would say its economy is anything other than a huge success.
Note that Erdogan has been alternatively threatening Israel, Greece, Cyprus, Georgia, and now Syria in the last 9 months as he is flailing about trying to deflect the internal troubles in Turkey.
The private economy of Turkey is really screwed up. All growth in last 6 years was in non-durable goods, the imbalance of too many imports, no prospects of balancing the economic activity by exporting durable goods, and a labor base where 75% of the population only has a 8th grade education.
This uneducated populace is Erdogan’s political base, and they are getting hit the hardest as the bubble bursts. The educated metropolitan population that is much more classically liberal and secular (and Erdogan’s politlca opposition) are doing quite well as the cost of labor is falling and the rentier classes are unaffected by intra-Lira interest and rent wealth transfers.
Moody’s raised the rating of Turkey’s Federal debt because the debt is denominated in depreciating Lira.
The Central Bank of Turkey is dropping Lira from Helicopters right now to try to build inflation in a country where 70%+ of the population can not keep up with the bubble’s inflation rate.