Turkish economy in the past
The Turkish economy was in a vague and very fragile state in the last decade of the twentieth century, and fragile and unstable governments made the economic situation much worse. But the ruling Justice and Development Party paid serious attention to the issue of economy; so that, some considered Turkey not as a developing country but as a newly industrialized country. In the meantime, Turkey's geostrategic position, opportunities, access to major markets, fundamental reforms, etc., boosted the Turkish economy and led to the increasing of exports and per capita income. In fact, various factors have had role in growth of Turkey's economy. (Photo quoted from Turkey’s official website)
Previously, the sustainable management and predictability of the Turkish economy and politics, structural and democratic reforms, efforts to integrate Turkey into the international economy, attraction of more foreign capital, more Western attention to the Turkish economy, efforts to resolve the Kurdish issue and regional and foreign approaches such as reducing and minimizing tensions with neighbors and expanding trade relations, etc., each helped the boosting of the Turkey’s economy.
As in previous years, some economists have cited Turkey as one of the economic giants of the future, and found it easy to estimate Turkey's $ 500 billion export target for 2023. But now Turkey is facing a difficult situation.
Challenges of the Turkish economy
In general, the Turkish economy is facing many challenges. On the one hand, Turkish tourism, which had flourished, has declined significantly due reasons such as the coronavirus pandemic. The unprecedented decrease in the number of domestic and foreign tourists and the possibility of bankruptcy, as well as negative growth in sectors such as industry and services, etc., have blurred the outlook for the Turkish economy.
Previously, the amount of foreign investment in Turkey has reached to about $ 200 billion, most of which was from Europe. But Turkey's relations with the European Union are strained. In addition, apart from Trump's policies (which affected the Turkish economy from the United States),
Biden can now take a tougher line on Turkey through international pressure and sanctions. In addition, there is a risk of economic pressures and sanctions from the Arab actors and rivals in the Middle East on Erdogan, who has turned his foreign policy’s focus to aggressive policies and military intervention.
In another dimension, the Turkey’s budget deficit reached an unprecedented level. In the long run, this situation is uncontrollable. The devaluation of the lira, the state of foreign investment, the escalation of tensions and political crises, have led the Turkish economy to a period of new challenges.
What is clear is that the Turkish economy shrank in 2020 for the first time in a decade. This is while; experts had predicted that the Turkish economy would grow by 5% in 2020.
Some now see Turkey in pre-crisis conditions, and believe that slowing of the growth in all sectors of the economy, declining political confidence, the devaluation of the national currency, double-digit inflation, declining Turkish foreign exchange reserves, and stagnation are alarming for the country. Earlier, the government of Ankara set a target of $ 500 billion in exports per year in line with the goals set for the year of 2023 and the 100th anniversary of the Republic of Turkey.However, in the case of an early end to the coronavirus epidemic, determining the situation of 3 million Syrians (who have taken refuge in Turkey), the inflow of foreign investment, the increasing of the currency, the overcoming of political and social crises in Turkey in 2021, can led to the growth of Turkey’s economy.
Farzad Ramezani Bonesh
Senior Researcher and Analyst of International Affairs
