How does Turkey do it?
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U. S. President Barack Obama (not shown) meets Turkey Prime Minister
Recep Tayyip Erdoğan during the United Nations General Assembly in New
York on September 20, 2011. UPI/Allan Tannenbaum/Pool
License photo
By MARTIN WALKER, UPI Editor Emeritus
ISTANBUL, Turkey, June 25 (UPI) -- As the economies of Europe, China, India and the United States all slow at once, how does Turkey do it? How does this country, poised at the intersections of Europe, Asia and the Middle East, grow its economy last year at close to 10 percent, lower its trade deficit and get its sovereign debt upgraded by Moody's?
Low debt is part of the answer. The economy has been growing so fast that its sovereign debt is now reduced to just 42 percent of Turkish gross domestic product, the lowest level in Europe after Sweden, Russia and the Czech Republic.
Intelligent policies help. Noting the warning signs last year when the trade deficit went to more than 10 percent of GDP, the Turkish central bank introduced a controversial but imaginative two-tier interest rate system to discourage inflows of hot money, which can flow out again just as fast.
But at the same time, to encourage inward investment and local manufacture, the government introduced new trade incentives, which allow foreign automakers like Renault to export more cars to Turkey but only if they increase their local output. Automakers that increase annual output in Turkey by 100,000 units will be entitled to import additional vehicles equaling 15 percent of that amount without tariffs, Economy Minister Zafer Caglayan explained.
ISTANBUL, Turkey, June 25 (UPI) -- As the economies of Europe, China, India and the United States all slow at once, how does Turkey do it? How does this country, poised at the intersections of Europe, Asia and the Middle East, grow its economy last year at close to 10 percent, lower its trade deficit and get its sovereign debt upgraded by Moody's?
Low debt is part of the answer. The economy has been growing so fast that its sovereign debt is now reduced to just 42 percent of Turkish gross domestic product, the lowest level in Europe after Sweden, Russia and the Czech Republic.
Intelligent policies help. Noting the warning signs last year when the trade deficit went to more than 10 percent of GDP, the Turkish central bank introduced a controversial but imaginative two-tier interest rate system to discourage inflows of hot money, which can flow out again just as fast.
But at the same time, to encourage inward investment and local manufacture, the government introduced new trade incentives, which allow foreign automakers like Renault to export more cars to Turkey but only if they increase their local output. Automakers that increase annual output in Turkey by 100,000 units will be entitled to import additional vehicles equaling 15 percent of that amount without tariffs, Economy Minister Zafer Caglayan explained.
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