The recent global economic crisis affected the economies of various countries in a tremendous way. In economic terms, it is impossible to think of a country whose economy was ton affected by the financial meltdown. Turkey is one of the countries whose economies were not spared by the crisis. Its various economic sectors were shaken leading to a disruption of the way of life. It is not uncommon to witness a social conflict in times of economic hardship. Is this due to the frustration that people experience when their efforts do not lead to a better economy? The thought of someone being responsible for the misery that is present during tumultuous economic times may make people angry. How did the global economic crisis affect the Turkish economy?
The Turkish economy was affected by job losses. A good number of people lost their jobs during the global financial crisis and this affected not only the economic standards of the households but the economy of the country as a whole. The closure of industries due to difficult financial circumstances was a factor in this rampant job loss. Other moves that led to job losses were downsizing and the transfer of industrial installations to locations with perceived low operational costs. The relocation comes with the award of job opportunities to the local people in the new locations and the remaining behind former employees who would not move to the new locations (OECD 2008, pp.20-21). Therefore these former employees had to inevitably lose their jobs.
Far from job losses, the Turkish economy witnessed a drastic reduction of foreign capital flowing into the Turkish economy (OECD 2008, pp.19). The flow of foreign capital has been identified as one of the major driving forces of the Turkish economy. What happens when a major driving force collapses? The result is obvious. The economy had to weaken since the support that the foreign investments rendered to the economy ceased. The reason for the reduction in the flow of foreign capital flow to Turkey is that the financial crisis affected all major economies where the excess capital that can be invested in foreign economies is usually in plenty. It is important to note that even small economies were not spared from the agonies for the financial meltdown. This means that nearly all sources of foreign capital flow to the Turkish economy were affected. The opportunities to borrow from other economies and international institutions with a lending ability such as the Breton Woods foundations were equally affected and this added to the problem of reduced flow of foreign capital to Turkey. Is the Turkish economy still in the doldrums?
The Turkish economy is on a solid recovery path from the financial crisis. The continuation of the opening of markets and the reforming of the financial policies is an important element that has hastened the recovery. It is therefore not true to say that the Turkish economy is in recession. Other factors that have supported the recovery include the diversified nature of the economy and the confidence that has emanated from the slow but sure recovery of major markets such as the United States. What is the future of the Turkish economy in the short term and the long term?
Turkey can only support a long-lasting economic order with clear and complete market reforms. If this does not occur, the economy will remain vulnerable to shocks. The short-term period is still economically dull. The low-skilled people are still unemployed and will take a long time to get back to work. The steady flow of foreign capital will not begin taking place soon since the crisis was worldwide. In the long term, the Turkish economy is likely to prosper. This is however pegged on total reforms (OECD 2008, pp.32).
Organization for Economic Co-operation and Development (OECD). (2008). OECD Economic Surveys:Turkey: New York: Publishing.