In the run up to Turkey’s general election, the ruling AK Party has made much of the economic boom the country has experienced since it came to power in 2002 with record foreign investment, and lower inflation. However, analysts say the strength of the recovery is partly a reflection of the depth of the economic crisis in 2001.
Financial journalist Ugur Gurses believes whoever wins stability is key to that growth continuing: “We are just talking about political stability so if political stability continues, I believe that Turkish assets will continue to rise.”
GNP growth was lower last year at 6%, compared with 7.9% in 2002. Inflation was 29.7% then and had fallen to 9.65% in 2006. Employment has dipped slightly from 10.3% to 9.9% and annual per capital income has risen from 2,150 euros in 2002 to 3,900 euros last year.
Economists point out that reforms of the banking sector, which took place before the 2001 crisis, also helped by attracting foreign banks into the market.
However as much as a fifth of Turkey’s population live in poverty and although that figure is falling, one shop keeper said times remain hard: “Our business is not going well. It wasn’t good in the past either. People think things are expensive because they lack purchasing power. Small businesses that pay the taxes they should are having a tough time.”
Indeed, the black economy amounts to more than a quarter of gross national product, down from 30% a few years ago, but is still a major obstacle to economic development.