Articles

Economic Contraction

Looking for a Fresh Locomotive for Growth

In October 2008, the columnist Murat Yetkin compared Prime Minister Erdogan to a man with the flu, wandering naked in the snow and shouting he was fine. Even in late November, the Minister of Finance, Kemal Unakitan, was arguing that as Turkey had been through destructive crises in the past, it would be “immune” to this one.

Such arguments fly in the face of the facts. During the summer, the Turkish economy showed signs of leveling off, with GNP in the third quarter only 0.5% above a year earlier, but since September it has been in near contraction. The Istanbul Stock Exchange index has fallen in dollar terms by two thirds over the past year. Turkey has, in other words, moved in parallel with the world economy – with all the questions and anxieties this raises.