Turkey endeavours to find a way out of recession

The Turkish economy is in recession. It is therefore not surprising that the Turks are using all the possible options to try and improve the economic situation. This is the context in which we should read the latest news that the Turkish and Russian governments seek a closer relationship. The volume of trade between the two countries is to increase appreciably. Evidently Erdogan envisages a clear rise in Turkish exports and a correction to the high deficit in the bilateral balance of trade.

In actual fact, the Russian market offers Turkish companies real potential. Because following the end of the sanctions imposed by Russia, Turkish exports are still on the road to normalisation. Yet they will hardly exceed the peak figures achieved in the past.

Moreover, the increase in exports needs to be compared to the very probable rise in imports from Russia. The strong reliance on Russian energy supplies and technological know-how make it hard for Turkey to achieve more than a slight reduction in what has for years been a high deficit in trade with Russia. Upcoming large-scale projects, such as construction of a gas pipeline between the two countries or of a nuclear power station in Turkey with Russian help, will no doubt primarily be to the benefit of Russia, which is the stronger of the two trading partners anyway.

In the coming months, Turkey will be pinning its hopes on the tourism sector. If Russian holidaymakers in the next high season once again flood Turkish beaches, then the Turkish economy will garner important revenues. And that would in any case pose a slightly positive stimulus for the economy as a whole.

 

Yet for all the efforts, the economic trend in Turkey will remain relatively weak for the foreseeable future. The future prospects of the country will above all depend on the further political developments. Political intervention in the economy represents a major potential obstacle to additional foreign direct investment, which Turkey so desperately needs. Tourism on its own will not spark a sustainable acceleration in growth.

 

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