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1. Why you have chosen the article and what makes it interesting?

Although, based on the definition of International Money Fund (IMF) one of the emerging
economy, Turkish’s economy booming up (especially last dozen years), it faces current political
issues and the reflections of the issues on the economy are the subject of query. At this point, it is
interesting to see an article titled “The mask is off”
by The Economist magazine that regards
on the economic growth in Turkey. Furthermore, view of macroeconomic aspect of world
economies, Turkey’s economy is at 17
in the nominal order and one of the rapid growing
countries together with Brazil, India and so on due to this Turkey’s current economic process
will provide us experiences to understand the going on process of the other.

2. What is the article all about?

In the article, basically, indicated that the political turmoil which emerged at the end of the
2013 until 30
of March 2014 exposes economic malaise. A series of corruption scandals about
some Turkish ministers, protests against Prime Minister Erdogan made local/foreign
investigators anxiety about Turkey. Based on the numbers in inflation, interest rates, the power
of Turkish money, unemployment rate are used to validate the assumption for bring to a
standstill on GDP growth. Article says, the inflation rate is running over 7 per cent, the current-
account deficit is around 7% of GDP and also Turkish Lira is losing value against USD.

Moreover, in this too pessimistic article, the difficult process having by Turkey’s economy
also faces some problems because of the political issues such as some Turkish businessmen’
assets have been frozen who are close the government. In addition, Turkey’s impressive GDP
that reached an annual 9 per cent in 2010 and 2011 mostly derived from Turkish construction
firms and these firms currently languished, stated in study. Another pessimistic approach for
dropping of GDP is regards on two huge projects that are planning to complete which are A
$29.8 billion project to build a third airport for Istanbul and a $10 billion canal to relieve the
congested Bosphorus; however, the article also consider these projects as vulnerable due to
requirement of international financing. At this point, political issues again seen as obstacle for
international investors to trust according to article.



3. How is the article relevant to the syllabus of Macroeconomics that you learnt in

In the article, GDP growth in Turkey is subject-matter. In overall, it mentions about
economic and political elements and their stability over GDP. As we have learnt in syllabus in
Macroeconomics, economic growth measures either increase of real GDP or real GDP per capita
over some time period. In the article, it had critical analysis on Turkey’s GDP in the manner of
negative elements of political issues in recent period.

4. Do you agree or disagree the content of the article? Elaborate and discuss using the
theory that you learn in class.
5. Which theory or model that can be used to explain or support your article?
First of all, it is possible to claim that, based on some economists, articles, and approaches
studied by Turkish scholar recently, the article is pessimistic, because, Turkey’s economy faced
such problems in past and now its feet pressing on the ground stronger than past and current
picture is not permanent although there are some reasons to be worry about.
Based on Turkish
economists point of view, and also point view of mine it is not fair to be agree with the content
of article.
Better understanding of the matter, it will be beneficial for us to look over the near past and
current situation in numerical values of Turkey’s economy. By starting, as we learnt in the class,
Gross Domestic Product, GDP is a measurement of all goods and services a nation produces in a
year. It can be calculate by two ways; expenditure approach, and also income approach whereby
the former measures total spending of a government and last one measures total income.
GDP (Expenditure Approach) = C + I + G + (X-M)

GDP (Income Approach) = COE + R + I + P + C + T + D + N
GDP: $789.3 billion (2012)

Population: 74 million (2012)
GDP per capita = Real GDP/Population = $789.3 billion/74 million: $10,666 based on 2012.
Inflation rate: 6.1% (April 2013)
GDP Growth: 2.2% annual change (2012)

Yulek Murat, Economic situation after the local election, Dunya Newspaper.
World Bank

Unemployment: 9.8% (August 2013)
Export: $167.60 billion (2013)
Base on the source of World Bank, Turkey’s economy had incresed last decade. The
graph below indicates the annual growth rate in past a few years. According to it, althoguh in
2013 the eate dropped from 5.3 to 1.3 per cent most probably negative effects of political issues
and local election but after than at the last quarter of it and the beginning of 2014 it began to
normalize whereby it reached at 4.4 per cent. Experts interprets this as normal.

According to increase in GDP, Turkey’s GDP per capita had increased as well, in past a
few years, as can be seen in the graph below. Experts, express that, GDP per capita will be
$11,277 in 2014. It is also proof that, it is early to be pessimistic for the expectation of GDP
growth for next years.


It will give us good opportunity to understand overall picture of world to compare GDP
growth in world bases and Turkey. As it can be seen on the graph, compared to 3 different
macroeconomic dimensions, Turkey’s position is not too much bad. Although, it had dropped in
2014, based on World Bank data, forecasting indicates better GDP growth. Beside this,
according to experts though, expectation of Fed and Abe for coming years will be increase in
GDP of US and Japan economies. This improvement is considering as beneficial for Turkey’s
GDP growth. Moreover, the
relationship between US and
Iran becoming good and this
will ensure positive effect on
Turkey’s economy, as experts
Furthermore, if we refer to
the foreign currency and stock
exchange movement in the
Turkey’s economy, (refer to
the chart below: adopted from
Reuters) we will easily aware
for optimistic forecasting of
the macroeconomic level of
movement. The reason for
stating is that, although local election of Turkey happened in 30
of March, when we investigate
the movement of transactions (as we see the chart below) began to increase 6 days before the
election which is 24
of March. It obviously proofs that investments and the overall economic
forecasting is in the positive direction. These positive movements will bring increasing return for
the GDP and GDP growth as it happened before the current political issues.

As a result, by looking over the economists’ statement, and also by the aid of the data
provided (with the charts) it is unfair to conclude that Turkey’s economy is in the trouble which
stem from current political issues. Although there are some reasons to be worry about, it is not
possible to be pessimistic about the rate of GDP growth and GDP per capita. On the other hand,
since GDP is depend on C, I, G and (X-M), we should consider the other factors that can be
affect the rate of GDP as such currently it might be possible to pay attention on G due to in
recent Turkish Government take decision to distribute tablet computer to every student in Turkey
for free. Due to this, affording the cost of it will increase the G (Government Spending) slightly.
However, Ministry of Economy currently mentioned about the positive forecasting on
investments, as well as increasing expectation of export, base on these, there will be increase in I
and X. In general, these expectations let us to think in optimistic way of Turkey’s economy.