TWN Global Economy Series no. 21 The Global Crisis and the Turkish Economy by Ercan Uygur Publisher: TWN (ISBN: 978-967-5412-14-1) Year: 2010   No. of pages: 72

ABOUT THE BOOK

After a period of relatively high and stable growth, the Turkish economy suffered a serious blow from the global crisis of 2008-09. This paper examines the extent to which the major macroeconomic indicators of growth, employment and inflation in Turkey have been affected by the worldwide downturn. The paper also looks at the main channels through which the crisis reached Turkish shores: external trade, capital flows, the banking sector and business confidence.

Assessing the Turkish authorities’ response to the crisis, the paper contends that there was a delay in taking fiscal and monetary policy action to counteract the effects of the global turmoil. The effectiveness of the measures that were eventually implemented has also varied, with further concerns arising over the burden imposed by the fiscal measures on the government budget.

In terms of the future outlook, the paper states that post-crisis adjustments in the global economy may put paid to Turkey’s prior reliance on foreign capital inflows to fuel growth. In any event, the crisis has amply exposed the dangers of dependence on volatile financial flows – a dependence which, in Turkey’s case, has also been detrimental to long-run competitiveness and employment generation. Consequently, the author suggests, Turkey should move away from this unsustainable growth strategy and, among other measures, consider instituting capital and exchange controls in the medium term.

ABOUT THE AUTHOR

ERCAN UYGUR is Professor of Economics at Ankara University and the president of the Turkish Economic Association.

Contents

1          INTRODUCTION    

2          RECENT DEVELOPMENTS: GROWTH, EMPLOYMENT AND             INFLATION            
            Growth  
            Employment      
            Inflation           

3          THE IMPACT OF THE GLOBAL CRISIS ON THE TURKISH ECONOMY       
            Foreign Trade and the Current Account           
            The Capital Account and Foreign Debt
            Banking and Finance    
            Global Uncertainty and Loss of Confidence      

4          MONETARY POLICY RESPONSE TO THE GLOBAL CRISIS          
            Monetary Policy in Turkey                   
            Monetary Policy Measures to Counteract the Global Crisis       

5          FISCAL POLICY RESPONSE TO THE GLOBAL CRISIS         
            Fiscal Policy in Turkey 
            Fiscal Policy Measures to Counteract the Global Crisis 

6          PROSPECTS FOR THE FUTURE 

7          CONCLUDING REMARKS      
            Medium-Term Policy Alternatives        

REFERENCES         

APPENDIX I           Details of Monetary Policy Measures to Counteract the Global Crisis    

APPENDIX II         Details of Fiscal Policy Measures to Counteract the Global Crisis    

PRICE

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