by David P. Goldman
Middle East Quarterly
Winter 2012, pp. 25-30
Turkey’s high-flying economy, which expanded at a 10 percent annual rate of gross domestic product growth during the first half of 2011,[1] will crash-land in 2012. Prime Minister Recep Tayyip Erdoğan’s «economic miracle,» to use the Daily Telegraph‘s admiring words,[2] depended on a 40 percent annual rate of bank credit expansion, which in turn produced a balance of payments deficit as wide as that of southern Europe’s crisis countries. Markets have already anticipated a sudden turnaround in the Turkish economy. The Turkish lira (TRY) fell by a quarter between November 2010 and September 2011, making it the world’s worst performing emerging market currency.[3] The stock market has fallen in dollar terms by 40 percent, making Turkey the worst performer after Egypt among all the markets in the MSCI Tradable Index during 2011. (See Graph 1 for Turkey vs. emerging markets.) And most analysts now expect that the cyclical slowdown will uncover deep deficiencies in Turkey’s labor force and infrastructure, leading to a prolonged structural slump rather than a passing recession.
The suddenness and size of this economic setback will in most likelihood erode the ruling Justice and Development Party’s (Adalet ve Kalkınma Partisi, AKP) capacity to govern on the strength of pragmatic success rather than Islamist ideology; will undercut its ability to use economic incentives to defuse Kurdish separatism and contain domestic opposition; and will weaken Ankara’s claim to a leading regional role........
....Διαβάστε περισσότερα www.drougos.gr
Middle East Quarterly
Winter 2012, pp. 25-30
Turkey’s high-flying economy, which expanded at a 10 percent annual rate of gross domestic product growth during the first half of 2011,[1] will crash-land in 2012. Prime Minister Recep Tayyip Erdoğan’s «economic miracle,» to use the Daily Telegraph‘s admiring words,[2] depended on a 40 percent annual rate of bank credit expansion, which in turn produced a balance of payments deficit as wide as that of southern Europe’s crisis countries. Markets have already anticipated a sudden turnaround in the Turkish economy. The Turkish lira (TRY) fell by a quarter between November 2010 and September 2011, making it the world’s worst performing emerging market currency.[3] The stock market has fallen in dollar terms by 40 percent, making Turkey the worst performer after Egypt among all the markets in the MSCI Tradable Index during 2011. (See Graph 1 for Turkey vs. emerging markets.) And most analysts now expect that the cyclical slowdown will uncover deep deficiencies in Turkey’s labor force and infrastructure, leading to a prolonged structural slump rather than a passing recession.
The suddenness and size of this economic setback will in most likelihood erode the ruling Justice and Development Party’s (Adalet ve Kalkınma Partisi, AKP) capacity to govern on the strength of pragmatic success rather than Islamist ideology; will undercut its ability to use economic incentives to defuse Kurdish separatism and contain domestic opposition; and will weaken Ankara’s claim to a leading regional role........
....Διαβάστε περισσότερα www.drougos.gr
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