Fokus Türkei en+ Berichte+ Einschätzungen+ Analysen+ Berichte+ Einschätzungen+ Beri Yelda Yücel 1 June 2009 The Global Economic Crisis and its Impacts on Turkey Introduction Turkey’s recent history following the 2001 economic crisis should be divided into two sub-periods: 2002 to 2006, and 2007 to 2009. The former period was characterized by a notable average annual GDP growth of 7.2%, declining inflation(from around 70% to 10%) and relative economic and political stability under a single party government. The global environment was conducive to economic growth, with an increase in capital inflows to emerging markets, which Turkey benefitted from extensively. Fiscal discipline was maintained, bringing the budget deficit from around 12% of the GDP in 2002 to 0.6% in 2006. Along with with increased capital inflow, interest rates were falling and confidence in the economy was improving as a result of the implementation of an IMF program which set into motion a series of reforms in the banking and public sectors. Turkey became an EU member candidate in 2005, further contributing to the positive outlook of the country. During the years 2007 to 2009, however, trends in growth dynamics and the international environment changed, leading to an increasingly pessimistic outlook for Turkey’s economy Into the recession: 2007-2008 Turkey’s brilliant growth performance began to stagger as early as the second quarter of 2007 for two reasons: firstly, because of local political debacles, and secondly, because of the forthcoming global economic turmoil, which surfaced in the US mortgage business in the second half of the year. Although the blow to Turkey’s economy largely came from the global economic crisis of 2008, it would not be wrong to argue that Turkey’s growth dynamics had started to show weaknesses long before that date, owing to local political issues and a slowdown in the reform agenda of the government. In fact, the model which was so successful from 2002 to 2006 in spurring on growth was about to complete its lifecycle, and a new model was required, backed by further economic and social reforms. In this regard, Turkey was late in re-modeling its growth strategy and thus caught up in the crisis rather unprepared. In 2007, the infamous“turban problem” 2 and the governing Justice and Development Party’s (AKP) efforts to elect Abdullah Gül as president dragged Turkey into political deadlock. The government’s first attempt to elect Gul in April was strongly opposed by some secular groups as well as the Army, and Turkey was forced into early elections on July 22nd. Referat: Westliche Industrieländer www.fes.de/international