The world economic crisis appears to be hitting Turkey, one of the fastest growing economies in the world. The government is lowering its growth predictions and says it is now importing more goods and services than it is exporting.
The Turkish Deputy Prime Minister and Finance Minister Ali Babacan said Thursday that the country's economy is likely to slow down next year.
The deputy prime minister warned that the government had revised down its predictions for economic growth to four percent in 2012 from five percent, after hitting an estimated 7.5 percent this year.
Up until now, the Turkish economy seemed to be immune to the bad news, maintaining a fast-clip level of growth the past few years.
Chief Economist Inan Demir of Turkey's Finance Bank says the growth prediction for 2012 may still be too optimistic.
"The growth estimate for four percent for next year on top of 7.5 percent for 2011 is ambitious to say the least, given the uncertainties surrounding the global economy. So that could be a point of the concern for the market going forward," said Demir.
Emre Yigit, chief economist for the Turkish trading house Global Securities, says the current financial crisis in Europe is of particular concern to Turkey.
"Europe is our main trading partner," he said. "It takes roughly half of our exports and provides with roughly half of our imports. So it's exposed on the trade channel if growth in Europe slows down. If the European recession deepens, then the Turkish exporters will face difficulties."
A large amount of goods being imported into a country versus being exported can often be a sign of an unbalanced economy. To correct the imbalance, countries borrow money from other nations at low interest rates. But, the longer the deficit goes on, the higher the level of investment debits will be accrued, taking a toll on a nation's economy in the long term.
Finance Bank economist Inan Demir warns this could make Turkey vulnerable to shocks like the 2008 collapse in the U.S.-based Lehman Brothers bank.
"Such a scenario at the extreme could see Turkey's GDP growth turning negative in 2012. Although its not our base line scenario I think it worth highlighting," he said.
But efforts by Turkish businesses to diversify their dependance on European markets could help resolve its vulnerability to such financial ripples. And, the fact that the Turkish Lira has decreased in value, making its exports cheaper and more desirable in the global markets, could help offset future problems.
"Over 2012, I expect more Turkish exports to Japan to the United States, to the developing world and less to Europe," said Yigit of Global Securities. Let's not to forget the Turkish lira has already lost 20 percent to 25 percent of its value, over the course of next year. So Turkish exporters are much more competitive abroad than they were so this should take care of the export problems."
Despite the outcome, this current imbalance in Turkey shows that even the fastest growing economies are not impervious to the global economic downturn.