Today is an important day when the growth rates of Turkey are announced. As I was writing these lines, Turkey’s growth rate for the fourth quarter of 2017 and its annual growth rates were not yet announced.
Even though it is difficult to make estimations on a day when the growth rates are being announced, I think it is necessary to make a forecast based on certain evaluations.
How much will Turkey grow in 2017?
Firstly, I have a strong expectation that Turkey will be the fastest growing economy in the world by growing from 7.5 to 8 percent in 2017.
Considering that the Turkish economy grew by 7.4 percent in the first three quarters of 2017 and that leading indicators, primarily industrial production, showed 7.6 percent growth in three-month average in the last quarter, my mild guess for annual growth is 7.5 percent.
Of course this is only a guess, but it should be remembered that it is supported by data.
According to the latest forecasts of the AA Financial Expectation Survey, the Turkish economy was expected to grow by 7.3 percent in 2017.
How much did other countries grow?
In 2017, as China’s annual growth was 6.9 percent, India grew by 7.1 percent and Indonesia by 5.1 percent, which were among the fastest growing countries in the world.
Leaving those countries behind with its annual growth rate, Turkey will probably be the world’s fastest growing economy both among OECD and G20 countries.
Economic growth and income per capita
The Turkish economy, which grew by 8.5 percent in 2011, making obligatory sacrifices preferred lower growth rates in later years. Thus, in accordance with the forecasts and leading indicators, we can say that this period will bring the highest growth rate which it has aimed for since 2011.
Moreover, Turkey will be located in a bigger growth plateau with this rate; it will break the trap that it has been squeezed between 10.000 and 11.000 dollars income per capita in the last 10 years and it will push for higher per capita income.
On the other hand, there is the situation that the impacts of the economic growth cannot be felt clearly at the same rate with the growth speed in per capita figures which are calculated based on the dollar due to mobility in the dollar and depreciation in the lira.
However, we can say that the mobility in exchange rates are rather short term and with the stability to be reached in the upcoming period, the impacts of the high growth rates on per capita income, which are the measurement of growth rates in international comparisons, will be felt.
Sustaining economic growth is more important than the growth itself
After Turkey preferred low growth rates in 2011, it is a very significant success that Turkey became the world’s fastest growing country in the last six-year period despite the Gezi protests, the Dec. 17-25 events and the treacherous July 15 coup attempt, which took place internally since 2013, and the negative perception operations created by international credit rating agencies.
Especially the extraordinary performance that it showed after the treacherous July 15 coup attempt shows us how strong its economic structure is once again.
Turkish economy must further focus on its problematic fields to be able to sustain the growth rates that it has reached in the high growth plateau which it has entered, and have the impacts of high growth rates felt on dollar-based per capita income clearly.
We can say that increases in investments are extremely important for the sustainability of the growth, and in order to achieve this, effective solutions are required such as developing new financial instruments and decreasing interest expenses that cause the problem of financing costs, which is one of the biggest obstacles in front of investments.