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.

As Deputy Prime Minister Mehmet Simsek conceded, government guarantees encouraging loan expansion were the main booster of growth, coupled with tax cuts and incentives. The economy’s growth was driven largely by domestic consumption, which brought about double-digit inflation — 12% in consumer prices at the end of 2017.

As the Turkish lira tumbled, the price of the dollar increased 21.7% last year, making Turkey’s imports more expensive. Coupled with the rise of global energy and commodity prices, this pushed up production costs at home, resulting in a 15% annual increase in producer prices. Hence, Turkey’s growth came at the expense of an unruly inflation.