Turkey Economy Rebounds

It was a very difficult time for Turkey. A few months after a failed coup on July 15, 2016, President Recep Tayyip Erdogan was asking people to sell their dollar-denominated savings and instead buy the local currency–lira.

Once a promising asset for international investors, the lira rapidly lost value in the later half of the year, as businesses and households rushed to the safety of foreign currencies, TRTWorld reported.

Economic growth was down. The world’s top rating agencies advised it wasn’t wise to invest in the country. And there were concerns over its high foreign corporate debt. Then the unexpected happened.

Growth came roaring back. The GDP, a measure of output of goods and services produced in an economy, hit 5% in the first three months of 2017.

That performance beat the expectations of most analysts, coming just months after GDP shrank 1.8% during July-September 2016, one of the worst performing quarters for Turkey in years.

The World Bank also upgraded its outlook, revising its full-year growth estimate by half a percentage point. Just months before, the global lender had expressed concern over political uncertainty in the country. Other indicators that had worried Turkey’s economic managers took a turn for the better as well.

Exports rose more than 9% in five months to May this year, according to the Turkish Statistical Institute. Better Russian ties are expected to boost the tourism industry. And the lira has been relatively stable for most of 2017.

There hasn’t been any drastic shift in the factors that drive the economy. But timely government intervention has helped shore up confidence and investments, says emerging markets analyst Timothy Ash of Bluebay Asset Management.

Government spending, for one, has increased over the past year, for instance through an initiative to subsidize the employment cost of newly hired workers.