Turkey's Economy
The Boom of the 2000s
How Turkey grew rapidly after 2002 with stable prices, foreign capital, construction and rising incomes, and the vulnerabilities that built up.
After the 2001 reforms, Turkey entered a boom.
Growth
- The economy grew strongly in most years from 2002.
- Incomes per person rose substantially.
- The middle class expanded.
Drivers
- Stable inflation and interest rates.
- Foreign capital inflows.
- EU accession talks, opened in 2005, boosted confidence.
- Construction: new housing, airports, bridges and hospitals.
- Exports to Europe and the Middle East.
Infrastructure
Projects included Istanbul Airport (2018), one of the world’s largest, and bridges across the Bosphorus.
Vulnerabilities
- Current account deficits: Turkey imported more than it exported, financed by foreign borrowing.
- Foreign currency debt of companies.
- Low savings.
- Credit booms.
Weakening institutions
Over the 2010s, critics argued that central bank independence and other institutions weakened, setting the stage for later crises.
The new airport
Istanbul Airport, opened in 2018, became one of the world's busiest, symbolising Turkey's construction-led growth.
Thinking booms have no risks
Turkey's boom relied on foreign borrowing and credit growth.
Key takeaways
- Turkey grew strongly from 2002.
- Stability, capital inflows and construction drove growth.
- Current account deficits and foreign currency debt built up.
- Institutions weakened in the 2010s.
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