Reports 2016

How strong is the Turkish economy?

21 June 2016


The Turkish economy enjoyed remarkable success during the last decade with an almost 7% average growth rate per year. The positive steps taken by the ruling Justice and Development Party (AKP), particularly during its first term in power between 2002 and 2006, have proven to be influential in this successful performance. However, in more recent times this positive outlook has significantly changed. Turkey is no longer portrayed as an exemplary emerging market but as an increasingly weak and financially vulnerable country which needs to address a number of key problems, including slowing growth, increasing unemployment, foreign exchange pressure, rising fiscal expenditures, loss of export competitiveness, and overall debt. Political turmoil, a deteriorating security situation and crises in the southern neighbourhood, along with deteriorating relations with Russia have also contributed to the gloomy picture. Most of these problems are the result of long-term structural problems which, according the Deputy Prime Minister Mehmet Simsek can be tackled only by fundamental reforms. However, it remains to be seen whether the government has the political will to seriously carry out such reform. A panel of experts analysed the current situation of the Turkish economy, prospects for the future and the possible consequences if reforms are not carried out.