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Turkey’s impressive growth rate has dark side

Turkey has posted a spectacular 7.4% growth rate for 2017, but other key economic indicators suggest there is little to celebrate.
A board showing the currency exchange rates of the U.S. dollar and the Euro against Turkish lira is on display at a currency exchange office in Istanbul, Turkey, January 11, 2017. REUTERS/Murad Sezer - RC111EF016F0
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On March 29, the Turkish Statistical Institute (TUIK) announced that the country’s gross domestic product grew 7.4% in 2017, the highest rate in the past four years. The 7.4% rate made Turkey the second fastest-growing economy in the Organization for Economic Cooperation and Development after Ireland with 7.8% and ahead of Slovenia with 5%. The GDP, however, shrank in terms of dollars to $851 billion from $863 billion in 2016, reflecting the dramatic depreciation of the Turkish lira. Accordingly, GDP per capita went down to $10,597 from $10,883 in 2016.

There is another side of the coin, which shows that Turkey’s spectacular growth came thanks to government propping that is hard to sustain and at the expense of excessive borrowing and increasing fragilities. The social leg of growth is also troubling, as low-income Turks appear to have benefited little in terms of job opportunities and income increase.

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