Turkey Resumes to a High Growth Trajectory

It has turned into what is called as "Turkish disease". Once Turkey resumes to a high growth trajectory, both the inflationary pressures and current account deficit (CAD) of the country reappear in a fierce cycle that destabilizes its sustainable economic development. Subsequently, how can the country break out from a recurring growth and bust cycle in the long-term, catch up with superior countries and make a better standard of living for its locals.

To generate consistent policy proposals, it is beneficial for Turkey to go back to the primary recent "stabilization paradigm" stage that was executed under the sponsorship of the IMF (International Monetary Fund). The primary objectives of the IMF were to fight higher inflation, monitor the burden of public debt and exponentially increasing budget deficit, reestablish stability in order to finance the industry, to match these macroeconomic accomplishments, and to advocate quick development in Turkey.

There is not a doubt that the International Monetary Fund has made considerable assistance to the structural change and economic strength of Turkey in the past ten years. In addition, it must be included that:

1. A constructive external setting like an increasing world trade amount, market penetration, and easy credit situation

2. The institution of a single political party administration in 2002 with effective direction, helped out legitimize the implemented economic approach and develop substantial public assistance.

Though Turkey has carried out a successful and outstanding catch up account in the past ten years, there are a lot of steps to be followed in order to internalize the recent accomplishments and make them long-term attributes of the latest paradigm for development.

Turkey is an extremely dynamic nation that has reached high development as of the last months of 2009 following four consecutive quarters of substantial contraction. The 2010 rate of growth of Turkey was approximately 9%, and it looks like that growth rate will arrive at almost 9% by this year's end. The growth rate in the primary nine months was higher than 9%, and collective requirement factors have been important indicators for strong development in the past quarter.

However, as projected, the two persistent problems of Turkey in terms of CAD and inflationary pressures have reemerged. This has been occurring as of 2007. It's depressing to notice that - in a nation imminent of a time of high worldwide unemployment and long financial stagnation - Turkey is attempting to hold back its employment-friendly development by contracting monetary and financial controls. This is, on the other hand, inevitable; latest statistics on output, CAD, and inflation has demonstrated that structural inflexibilities make up serious problems for the latest development performance's stability.

This indicates that the economy of Turkey should move away from its preoccupation with keeping financial main concerns and focus further on actual factors including productivity and employment creation. This can be achieved without the need to give up current accomplishments in the stability of its macroeconomics. Turkey needs to strengthen the economy by giving emphasis to microeconomic changes to improve possible sustainable development and the competitiveness of production, generally.