This study, written by Markus Jaeger
and published by Deutsche Bank Research,
depicts plausible scenarios for the Turkish economy in the medium
to long term.
- Turkey has in the past suffered from high levels of
macroeconomic instability. Over the last ten years average economic
growth has been modest. Sustained economic reform following the
2000-01 economic crisis has however improved the outlook for
economic stability and higher medium-term economic growth
- The continuation of macroeconomic discipline and structural
reform is likely to be driven by the prospect of EU accession. The
agreement reached between the EU and Turkey regarding the start of
accession negotiations in October 2005 is the first step in that
direction. Risks of setbacks stem from both sides, however.
- This study is to depict plausible scenarios for the Turkish
economy in the medium to long term, rather than predict at what
point in time accession will actually take place.
- In our baseline scenario, medium-term real GDP growth of a good
4% on average over the next 10 to 15 years is realistic, according
to DB Research’s proprietary long-term growth model
- While the continuation of economic reforms appears to be the
most likely scenario, it is not, however, a foregone conclusion.
Domestic political cleavages, setbacks on the IMF front and
geo-political developments could yet undermine the upbeat economic
outlook. We present two downside scenarios to account for this
- If Turkey realises its growth potential over the coming decade,
it will be a very different country and a very different economy by
the time it accedes to the EU. True, it will still be one of the
poorest EU economies on a per capita basis and will have the
largest agricultural sector. But Turkey’s level of economic
development will be comparable, in relative terms, to the levels
reached by Poland in 2004.
- The political and economic impact of EU convergence will be
unambiguously positive, as Turkey will benefit from continued
EU-supervised reforms, increased economic stability and higher
foreign investment flows.
- The banking sector in particular stands to benefit from
enhanced stability and higher economic growth, and is likely to
experience increased consolidation and foreign participation.