However, a high growth rate and decline in unemployment that is not reflected in the Western world accompany Turkey’s performance. Turkey’s drop in unemployment takes place during a time of dramatic movement of the labor force from the agricultural to the industrial sector. In other words, the Turkish economy has created jobs for the idle work force by raising industrial employment. The current account deficit (CAD), the only problem in the Turkish economy, has shown a tendency towards stability and will cease to be a problem when the growth rate declines. In addition, it should be noted that although the deficit is currently rising, the rate of the country’s total amount of debt as compared to gross domestic product (GDP) has declined. So even though the CAD has increased, external savings have played a role to clear the debts. Furthermore, exports grew significantly despite rising currency exchange rates.
It is obvious that in face of a huge crisis in the world economy, the Turkish economy is showing extraordinary performance. In commentary in The Wall Street Journal last week, Turkey’s economic performance was compared to that of the Asian Tigers. I have to say that this has not happened yet but, more accurately, it could happen. By its very nature, economics is a field of ups and downs, and every right or wrong decision by the administration will impact this process. Turkey still has a fragile economy which should be managed with extreme care because the costs of wrong decisions will be graver than the gains associated with the proper ones.
There is also much criticism of the Turkish economy as well. In response to Turkey’s favorable comparison to the Asian Tigers, a commentary published in the Financial Times called Turkey a pussycat, adding that a recession is a likely probability due to the CAD. The Times wrote: “So Turkey may be less of an exception than it first appears. Its growth has neither been as vertiginous nor its prospects quite as bright as its champions suggest.” The paper also argues that Turkey may face economic stagnation because of complicated central bank policies and the need to absorb inconsistencies through foreign currencies.
There are three points that we need to consider. First, despite some occasional ups and downs, the central bank’s policies are not complicated at all. The bank is just trying to be proactive, and its strength mainly comes from its harmony with the government. Because of this, any mistakes can be swiftly corrected. Besides, even if the policies are complicated, we should not assume that Western economic experts are so simple that they cannot comprehend the complexities. Second, inconsistencies in foreign currencies mainly concern the private sector, and it is known that corporations hold a sufficient amount of foreign currencies abroad to address this problem. Third, economic speculators in the West will not support stagnation, but we cannot say the same in respect to entrepreneurs in Turkey. And this is key in the discussion.
It is fairly difficult for those who analyze the Turkish economy through economic indicators alone to have a complete understanding because economic decisions that have been properly made are not the main determinants of economic performance. Turkey needs to avoid wrong decisions because the most important input responsible for the improved Turkish economy is the social input. The Anatolian people have become urbanized and industrialized, and they have repositioned themselves to face modernity. As a result, we now have not only a new bourgeoisie that possesses Islamic sentiments but also a new middle class that benefits extensively from urban opportunities. This refers to a new type of consumption focusing on children and the household. Spare time that used to be spent in idleness is now spent in pursuit of conspicuous consumption. In short, there will not be stagnation in Turkey. Turkish society is still on rise and will most probably remain so over the next 10 years.
On the other hand, the bourgeoisie is opening up new markets and extending its reach to take over Western corporations that will become less expensive because of the financial crisis. Turkey’s economic problems might be inflating or overheating, but Turkey is not in recession. Those who fail to read society will not be able to change their minds.