News / Europe

    Turkey's Economy Still Booming, But Challenges Remain

    Turkey's Prime Minister Tayyip Erdogan in his office at the AK Party headquarters the day after his they scored a resounding third consecutive election victory, in Ankara, Turkey, June 13, 2011
    Turkey's Prime Minister Tayyip Erdogan in his office at the AK Party headquarters the day after his they scored a resounding third consecutive election victory, in Ankara, Turkey, June 13, 2011
    Dorian Jones

    For the first time in its modern history, Turkey has resisted a serious global economic crisis, and also has decoupled itself from the rest of Europe by rebounding strongly in 2010. Although Turkey's economy is booming, however, the new government has some urgent matters to address.

    When it first came into power in 2002, the Justice and Development Party, or AKP, faced a devastating financial crisis.

    To prop up Turkey's economy, the International Monetary Fund supported an economic program for the country that it followed for nearly a decade, transforming Turkey into an economic tiger.  

    Now, with the AKP once again at the helm, the priorities of the new government will be to implement policies to address the new economic challenges it faces.   

    There are growing concerns that with the economy growing at 9 percent annually, there is a chance of it overheating, with inflation starting to rear its head. Also of concern is a skyrocketing deficit, running at nearly 8 percent of GDP [gross domestic product].

    Emre Yigit is chief economist for the Istanbul-based trading house Global Securities. He said while the current deficit is not too threatening, it eventually could spin out of control.

    "Turkey needs to borrow not less than probably $10 billion a month," said Yigit. "It's a testament to the strength of the Turkish economy and peoples' confidence in it, both at home and abroad, that this in fact has been going on more or less for years and nobody seems to be caring too much. But eventually chickens do come home to roost."

    The global financial markets have been clamoring for the Turkish central bank to raise interest rates to dampen Turkish consumers' demand for imports. But the central bank fears that would result in a surge of new money being injected into the economy, driving up the value of the Turkish lira and resulting in even more imports being bought.

    As a result, the government has been curtailing demand by increasing the amount of money that banks keep in their reserves, reducing the amount they can lend to consumers.  

    This approach is making markets increasingly nervous, especially with what is going on in Greece.

    Inan Demir, chief economist for Finance Bank, said time may be running out for Turkey.

    "I am more inclined to give the Turkish central bank the benefit of the doubt," said Demir. "But given that global uncertainties are escalating once again, the international markets - with their bout of risk aversion that we are seeing right now if it turns into something more generalized - might just not be that patient."

    The problems facing the Turkish economy also reveal fundamental structural problems that need to be addressed.

    Cengiz Aktar, a political scientist at Bahcesehir University, said, "This is not sustainable. It will need cash from abroad. Turkey has a zero savings rate. It needs foreign direct investment. It needs to import in order to export. I am afraid this happiness chain may break unless there is no fundamental and macro decisions."

    By Western standards, many parts of Turkey remain poor. Much of Anatolia, the rural eastern region, bears no resemblance to the glitter of Istanbul and the western coast. Still, Turkey's economic expansion has brought the prospect of a First World future closer than ever. The question is, for how long?

    You May Like

    Former US Envoys Urge Obama to Delay Troop Cuts in Afghanistan

    Keeping troop levels up during conflict with both Taliban and Islamic State is necessary to support Kabul government, they say

    First Lady to Visit Africa to Promote Girls' Education

    Michele Obama will be joined by daughters and actresses Meryl Streep and Freida Pinto

    Video NYSE Analyst: Brexit Will Continue to Place Pressure on Markets

    Despite orderly pricing and execution strategy at the New York Stock Exchange, analyst explains added pressure on world financial markets is likely

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Brexit Vote Plunges Global Markets Into Uncharted Territoryi
    X
    June 24, 2016 9:38 PM
    British voters plunged global markets into unknown territory after they voted Thursday to leave the European Union. The results of the Brexit vote, the term coined to describe the referendum, caught many off guard. Analysts say the resulting volatility could last for weeks, perhaps longer. Mil Arcega reports.
    Video

    Video Brexit Vote Plunges Global Markets Into Uncharted Territory

    British voters plunged global markets into unknown territory after they voted Thursday to leave the European Union. The results of the Brexit vote, the term coined to describe the referendum, caught many off guard. Analysts say the resulting volatility could last for weeks, perhaps longer. Mil Arcega reports.
    Video

    Video Orlando Shooting Changes Debate on Gun Control

    It’s been nearly two weeks since the largest mass shooting ever in the United States. Despite public calls for tighter gun control laws, Congress is at an impasse. Democratic lawmakers resorted to a 1960s civil rights tactic to portray their frustration. VOA’s Carolyn Presutti explains how the Orlando, Florida shooting is changing the debate.
    Video

    Video Tunisian Fishing Town Searches for Jobs, Local Development Solutions

    As the European Union tries to come to grips with its migrant crisis, some newcomers are leaving voluntarily. But those returning to their home countries face an uncertain future.  Five years after Tunisia's revolution, the tiny North African country is struggling with unrest, soaring unemployment and plummeting growth. From the southern Tunisian fishing town of Zarzis, Lisa Bryant takes a look for VOA at a search for local solutions.
    Video

    Video 'American Troops' in Russia Despite Tensions

    Historic battle re-enactment is a niche hobby with a fair number of adherents in Russia where past military victories are played-up by the Kremlin as a show of national strength. But, one group of World War II re-enactors in Moscow has the rare distinction of choosing to play western ally troops. VOA's Daniel Schearf explains.
    Video

    Video Experts: Very Few Killed in US Gun Violence Are Victims of Mass Shootings

    The deadly shooting at a Florida nightclub has reignited the debate in the U.S. over gun control. Although Congress doesn't provide government health agencies funds to study gun violence, public health experts say private research has helped them learn some things about the issue. VOA's Carol Pearson reports.
    Video

    Video Trump Unleashes Broadside Against Clinton to Try to Ease GOP Doubts

    Recent public opinion polls show Republican Donald Trump slipping behind Democrat Hillary Clinton in the presidential election matchup for November. Trump trails her both in fundraising and campaign organization, but he's intensifying his attacks on the former secretary of state. VOA National Correspondent Jim Malone reports.
    Video

    Video Muslim American Mayor Calls for Tolerance

    Syrian-born Mohamed Khairullah describes himself as "an American mayor who happens to be Muslim." As the three-term mayor of Prospect Park, New Jersey, he believes his town of 6,000 is an example of how ethnicity and religious beliefs should not determine a community's leadership. Ramon Taylor has this report from Prospect Park.
    Video

    Video Internal Rifts Over Syria Policy Could Be Headache for Next US President

    With the Obama administration showing little outward enthusiasm for adopting a more robust Syria policy, there is a strong likelihood that the internal discontent expressed by State Department employees will roll over to the next administration. VOA State Department correspondent Pam Dockins reports.
    Video

    Video Senegal to Park Colorful ‘Cars Rapide’ Permanently

    Brightly painted cars rapide are a hallmark of Dakar, offering residents a cheap way to get around the capital city since 1976. But the privately owned minibuses are scheduled to be parked for good in late 2018, as Ricci Shryock reports for VOA.
    Video

    Video Florida Gets $1 Million in Emergency Government Funding for Orlando

    The U.S. government has granted $1 million in emergency funding to the state of Florida to cover the costs linked to the June 12 massacre in Orlando. U.S. Attorney General Loretta Lynch announced the grant Tuesday in Orlando, where she met with survivors of the shooting attack that killed 49 people. Zlatica Hoke reports.
    Video

    Video How to Print Impossible Shapes with Metal

    3-D printing with metals is rapidly becoming more advanced. As printers become more affordable, the industry is partnering with universities to refine processes for manufacturing previously impossible things. A new 3-D printing lab aims to bring the new technology closer to everyday use. VOA's George Putic reports.
    Video

    Video Big Somali Community in Minnesota Observes Muslim Religious Feast

    Ramadan is widely observed in the north central US state of Minnesota, which a large Muslim community calls home. VOA Somali service reporter Mohmud Masadde files this report from Minneapolis, the state's biggest city.

    Special Report

    Adrift The Invisible African Diaspora