Turkey Economic Situation Looking Up
Good news for Turkey this quarter. Their economy grew by 11% just in the first quarter of this year, moving past China’s numbers for the same quarter.
As the Prime Minister, Recep Tayyip Erdogan said in reaction to the figures that came out on Thursday, “In growth, we passed China and Argentina, we became No. 1 in the world.”
Turkey Looking Good in Comparison
Turkey’s growth obviously stands in sharp contrast to many of its neighbors, as Greece is looking for an economic bailout and other Middle Eastern countries are struggling each quarter. The rapid growth in Turkey’s economy was certainly part of what secured Mr. Erdogan’s re-election June 12.
However, some are still skeptical and many are waiting to see what actions the new government makes about the current-account deficit. AS Emre Alkin, an Istanbul-based economist explained, “Turkey’s economic future is bright…but it needs a new growth model, not tomorrow, not today, but yesterday.”
But Investors Still Nervous
One of the main things making investors nervous is the Istanbul Stock Exchange. It has been one of the worst performers in the emerging markets this year and is down by 9.75% since early May.
Many people are unconcerned about potential economic troubles and unaware of risks to the growth that could occur from the 42% growth in low-interest consumer credit last year.
As Emrullah Turanli, the chairman of Tasyapi which is one of Turkey’s largest construction companies, said,
“Everything looks good. I don’t agree that Turkey consumes too much—look at the use of electricity in Turkey and in developed countries. How many kilowatts does Turkey consume and how many kilowatts do developed countries consume?”
Economists and bankers are nervously awaiting the future in Turkey. They produce minimal quantities of oil and gas and face high costs relative to their competitors so they often import semi-finished goods rather than making their own. In response to this situation, Acting Minister for Foreign Trade Zafer Caglayan recently pushed the government to target getting to $500 billion in exports by 2023, which is more than triple today’s levels.
Time will tell if Turkey will hit the market, or fail trying.