Numerous sources are voicing concern over the state of Turkey's economy of late. Granted, critics have been voicing concern over numerous aspects of the state of Turkey's affairs lately, from foreign policy problems to domestic political problems. Yes, Turkey's AKP is still large and in charge, and the problem it's currently battling in the headlines is its blockage of Twitter and YouTube in light of serious leaks. Of more interest to macroeconomists and observers is the future of the country's investment bubble.
For much of the last decade, Turkey was hailed as a model for the developing world, and certainly for the Muslim world for their successful incorporation of Islamic banking principles. The recently elected AKP seemed to be doing a great job cleaning up the corruption that had beleaguered the country for years, and achieving the sort of economic growth other nations hungered for. One of the MINT countries, it seemed like Turkey was en route to becoming a major component of the international economy, augmented in 2009 when the country was seen as a safer investment as the world's economies suffered from the recession. During this time, China continued to expand rapidly, creating a huge demand for exported resources. Turkey filled in this role, which supplied them with abundant credit, and also capitalized on rock-bottom interest rates in much of the developed world. According to CNN,the party's ending with the United States scaling back its quantitative easing program, in part thanks to increased confidence domestically since the recession. Some others say Turkey's economic woes are a function of the pushback against corruption that's taken the news by storm of late.
That said, Erdoğan has been skeptical of some of the proposed solutions, including raising interest rates. The IMF has proposed other solutions, including reining in expenditures, improving competitiveness, and becoming less vulnerable toward fluctuations in international investments. It's projected, however, that Erdoğan might remain recalcitrant on some of these proposals until after upcoming elections.
1 comment:
I really wonder what does it needs to develop a country. Banking is attractive but it is too volatile to be the base for development, and mostly all countries that develop with this kind of method fall into the bubble trap. We talked about intensive growth as it is the only way to grow steadily, but has any underdeveloped/developing countries get the direction? Can they? Will they? It seems like there is no way out.
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