Growth, current account deficit and hubris, September 2013

Summary

An economic position paper written for the seminar in Ankara hosted by the Central Bank for the Official Monetary and Financial Institutions Forum.

Turkey has been riding the crest of a wave. Since the governing AK Party came to power a decade ago, GDP has grown by an average 4.9% per year. Now, the government, keen to lift Turkey from its current position of the 17th or 18th largest economy in the world, is setting a 5.5% growth target for 2014-2018. This article reviews the hubris in such targets and the economic issues which cause Moody’s rating agency to warn: "Turkey has some of the highest external vulnerabilities ... within the investment-grade sovereign rating universe."

 

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