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Turkish economy, the last economic crisis and developments after the crisis
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Macro economic policies and developments in 2000 were
shaped in the framework of the Macro Economic Program announced
to the public in December 1999, covering the 2000-2002 period.
The basic aim of the program was specified as: cutting inflation down
to a single digit number after a period of three years, rapidly pulling
real interest rates down, giving the public fiscal balance a healthy and
sustainable structure, providing an atmosphere of sustainable growth in
the economy and undertaking structural reforms at once.
In the first months of 2000, major steps were taken in the areas of finance, monetary-exchange rate, income policies and structural reforms. However, the essence of the program, using the exchange rate as a peg, led to the overvaluation of the TL and export growth to be curtailed. At the year’s end, imports rocketed to $54.5 billion. While exports rose by 4.5% between 1999-2000, there was an upsurge of 34% in imports. Exports reached the level of $27.7 billion and the foreign trade value was $82.2 billion.
In November 2000, when the banking sector was immersed in a liquidity crunch,
the activities of one of the big banks were stopped. Because of the insecurity
triggered by the international rating agencies marking down Turkey’s credit note,
capital outflows hastened. In this process, overnight interests shot up to astronomical rates. This spike in the interest rates made it more difficult to finance the real economy and production was negatively affected. Markets ruffled by this situation, became uncontrollable to which the political crisis in February 2001 added fuel. Against excessive demand to foreign currency and hasty capital outflows, the economic authorities were forced to abandon the economic program and announced that they switched to the floating exchange rate regime.
As a result, the TL was devalued in real terms. When domestic demand
contracted and real wages shrank, the price advantage arising from exchange
rates and the decrease in cost advantage made exporting more attractive and
in 2001 the $30 billion "psychological limit" in exports was surpassed.
The contraction in domestic demand could not be contained given the devaluation
in 2002 and the decline in real wages. Companies opted for exports to be able
to survive. Hence, exports were $35 billion and imports were $50.8 billion in 2002.
When viewed in this perspective, our exports have scored a marked trend of growth.
From $26.6 billion in 1999, exports were repeatedly buoyed, by 4.5% up to $27.8
billion in 2000, by 12.8% up to $31.3 billion in 2001 and by 12% up to $35.1
billion in 2002.
Imports followed suit as the exchange rate policy led to the overvaluation
the of TL and the stimulation in domestic demand boosted the $40.7 billion
imports in 1999 to $54.5 billion in the next year.
However, the crisis in 2001 reversed the track whereby imports slumped
by 24% to $41.4 billion and the economy contracted by 9.5%.
In 2002, imports bounced back 22.8%, reaching $50.8 billion.
In 1999, exports’ coverage of imports dwindled from the 65.4% in 1999
to 51% in 2000, picked up steam by 75.7% in 2001.
In 2002, the rate fell again to 69.0%. Exports of agricultural products
in all export products diminished by 10.5%, to a struggling 5.72% share.
Similarly, exports of mining and stone quarry products dropped 0.4%,
having a share of 1.0%. Manufacturing industry products held a 93.1% share
thanks to a 13.8% improvement.
The most important group of countries in our exports were the EU countries;
Germany, the UK, the US, Italy and France being the first five.
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