Turkey’s economy has weathered some spectacular pratfalls in the past, with a major economic crisis in 2001 almost bringing the country to its knees. What’s different in 2004 from the previous "recoveries" is how committed Turkey is to establishing firm economic footing once and for all. The government is swallowing the International Monetary Fund’s painful economic medicine, making tough choices for fiscal discipline.
Turkey’s financial wunderkind, the 37-year old Minister of State for Treasury Ali Babacan credits a strong, popular and unified government with having both the clout in Ankara and the backing of the people to administer badly-needed shock therapy.
"During the last decade, stability has been a problem," Babacan concedes. "We had coalition governments and [frequent] early elections.
"But after the 2002 elections," which ushered his faintly Islamic yet pro-Western Justice and Development Party to power under Prime Minister R. Tayyip Erdogan, "we have a stable government, one the people have confidence in, which provides a much-needed base for economic recovery."
Erdogan came to Ankara under heavy suspicion due to his past in radical Islamist politics. But as mayor of ungovernable Istanbul he won grudging praise from political opponents for his hard work on civic issues and muted Islamic rhetoric. As Prime Minister he has focused on bread-and-butter issues, leading with gusto the country’s drive to join the European Union.
Indeed, the JDP’s acceptance of fiscal reform and pro-EU stance has rebuilt confidence in Turkey’s ability to manage its finances once the IMF decamps. "Our economic program was declared in detail before the election," Babacan, a graduate of the Kellogg School of Management notes. "We’re doing what we promised."
It was only during the 1980s that Turkey ditched its closed command-economy, replete with Soviet-style Five Year Plans and huge state-run monopolies. The result was a roller-coaster of boom and bust, with hyperinflation and a Wholesale Price Index at 160% by the end of 1995 and a Nominal Interest Rate of 320% at one point.
Such shenanigans were offset by production in overdrive – growth through the turbulent ‘90s averaged 5% per year. But in the late ‘90s the Asian crises and the collapse of the Russian economy cost Turkey valuable export markets. Foreign exchange sought calmer waters, leaving the government to resort to offering 140% interest on its T-bills to finance its deficit. Annual inflation ran at a Weimaresque 102%.
The IMF stepped in with a three-year stabilization program and a $4 billion jump start.
When Britain announced that it would withdraw aid to Greece and Turkey, the responsibility was passed on to the United States. America was afraid of spreading of communism because of that President Harry S. Truman asked military and economic aid for Greece and Turkey and established a doctrine named as the Truman Doctrine that would guide U.S. diplomacy for the next forty years.
A strong year in 2000 was followed by an average of .6% growth rate from 2001-2005. Germany was affected by the world’s economic status, which caused a drop in German exports. Since exports are one of the largest contributors to Germany’s GDP, it caused the their economy to slow. In addition to the world’s economic status, they were also affected by the “appreciating euro and sagging domestic investment” (Marketline).
Islam has been a dominant force throughout Turkish history. During the Ottoman Empire, Islam ruled every part of the theocratic state, but after the demise of the empire, Turkey's rulers led the country away from political Islam. The modern Turkish state has a strictly secular government, and Islam has been relegated to the personal sphere. Although Turkey has experienced a rise in fundamentalism in the past twenty years, the separation of church and state has remained relatively intact. Even with this increase of fundamentalist Islam, the wide majority of Muslims in Turkey are moderate and tolerant. They have adapted to modern life and value Islam for its moral and spiritual messages. Islam is a guide for right living and ethical conduct rather than a political system. Turkey constantly struggles to balance Islamic life with a secular government. Although the government wants to maintain a strict separation between religion and politics, it cannot ignore the power and influence that Islam has in the lives of the Turkish people.
Gustman, A. L., Steinmeier, T. L., & Tabatabai, N. (2012). How Did The Recession Of
In 2009, the United States economy began to recover from the Great Recession. To aid in the recovery, the newly elected president Barak Obama created the American Recovery and Reinvestment Act better known as the second of two “Stimulus Packages.” Pa...
...ults of the recession. In order for this never to happen again, there is a need to learn from the mistakes in the past and to look for the warning signs. The problem is not just restricted to one country, but is a global problem and needs to be addressed as such.
The effect of the Hyper-inflation was of sheer devastation in terms of economy. The German mark’s value decreased alarmingly within a short period of time and people literally started to burn the German mark notes just to make a fire as they thought this was of a much more bigger advantage than of its actual spending value. The rising cost for just one loaf of bread was unbelievable, in 1918 it sold at 0.63 marks, a normal price, until the end of the war hit. January 1923, a selling price of 250 marks and in the following months it rose in quick succession until in November one loaf actually cost 201,000,000,000 marks, just from this example we see the dire effects. People ended up having to take home “Daily” wages instead of weekly, with the help of a wheelbarrow. The w...
This economic growth didn’t however continue for long, with the economy peaking just before the start of the year 2000 followed by a sharp downturn that resulted in a temporary recession occurring around the middle of the year. This erratic behavior, most pronounced in retail trade, can be explained by the effects of both the millennium bug and the introduction of a general consumption tax in the form of the GST. The millennium bug caused much panic and with it bought panic spending especially in the IT sector thereby over inflating an already close to booming economy and after the non-event that the millennium (or Y2K) bug caused spending slumped and then further slumped due to the holding back of consumer spending on big ticket items such as cars and houses until the introduction of the GST.
As the Arab Spring enters its second year, major uprisings and revolts have occurred all over the Middle East, pushing for an end to the corrupt autocratic rule and an expansion of civil liberties and political rights. Most recently, images from Syria have emerged, depicting the government’s use of force to suppress the voice of its people. One might ask, “Is this the beginning of a revolution? Is the country on the path to democracy?” To assess this question and examine the future trends in the region, one must look back on the country’s somewhat tumultuous history, the relationship between the citizens and the state, and the political economy.
Historically, financial crises have been followed by a wave of governments defaulting on their debt obligations. The global economic history has experienced sovereign debt crisis such as in Latin America during the 80s, in Russia at the end of the 90s and in Argentina in the beginning of the 00s. The European debt crisis is the most significant of its kind that the economic world was seen started from 2010. Financial crises tend to lead to, or exacerbate, sharp economic downturns, low government revenues, widening government deficits, and high levels of debt, pushing many governments into default. Greece is currently facing such a sovereign debt crisis and Europe’s most indebted country despite its surplus in the early 2000s. Greece accumulated high levels of debt during the decade before the crisis, when the capital markets were highly liquid. As the crisis has unfolded, and capital markets have become more illiquid, Greece may no longer be able to roll over its maturing debt obligations. Investment by both the private and the public sectors has ground to a halt. Public sector debt has increased substantially as the state had to rely on official assistance to payroll expenses, fiscal deficit and fund social payments.
Though this economic expansion has been the longest since World War II (according to the New York Times, October 18, 1998), growth during the 1990’s has been weaker than during any growth cycle since the end of the war.
...Lower Public Debt, Structural Reforms Critical, says IMF’, IMF Country Report. International Monetary Fund, Washington, D.C. No. 11/181.
Throughout history, the middle east has often been the focus of news reporters. A middle eastern country that has not been exempt from this, is Turkey. Turkey has not only been a focus, but it also has had a very long, complicated history.
...inflation. This caused stocks to tumble. Real estate and fixed income became the prominent assets. From the 80's on, the market has enjoyed many years of prosperity, with the 90's being the decade of largest market growth. However, none of it would have been possible if it weren't for the lessons learned in the 1920's (Brown 90-107).
The economy in the United States was recently experiencing what is now called the Great Recession which occurred from December of 2007 to June of 2009. During this recession we experienced a decrease in our gross domestic product and experienced an increase to our unemployment. Since 2003 the American economy has been seen inflation rates as low as .1% in 2008 and as high as 4.1% in 2007. Rates such as these detail the increase and decrease in prices of products throughout the economy and has a considerable influence on the supply and demand of goods from cars to bread. In the past ten years inflation rates have continually seen positive values w...