Turkey’s economy up 11%, but growth brings risk

Turkey’s economy grew 11% in 2021, driven by domestic demand, exports and tourism, official data showed Monday. But the flashy rate has been marred by high inflation and appears hard to sustain.

Along with the dangerous surge in inflation, which has hit an annual of nearly 50%, casting a big shadow of uncertainty over the economy, an array of downsides stands out on the other side of the coin. Ignoring the sharp depreciation of the Turkish lira and the resulting inflation risks, Ankara has followed a growth-focused policy, motivated mainly by political concerns ahead of elections next year. It may have achieved a double-digit growth rate, but consumer and entrepreneur confidence has declined, and income distribution and employment indicators offer little to cheer about. The fragile environment in which the economy expanded has been marked also by fleeing foreign investors and a high-running country risk.