Why Turkey’s stability and prosperity matter to the world
A lot has been happening in and around Turkey in the last week. Russian President Vladimir Putin visited Turkey’s Recep Tayyip Erdogan, the government released its mid-term program for the economy (2018-2020) and the Istanbul Finance Summit deliberated the state of the Turkish economy. Meanwhile, next door the Kurdish authorities held a referendum for independence, causing harsh reactions from the Iraqi central government and anxiety among countries with sizable Kurdish minorities, including Turkey. This is as good a time as any to contemplate the state of the Turkish economy and its geopolitical importance to Europe and its neighboring countries. The Turkish economy experienced a serious dent due to the policy spat with Russia after the downing of a Russian fighter jet, and after the coup attempt in June 2016. Tourism was down by 31 percent, as was foreign direct investment. Tourism really matters to Turkey, which is grappling with a current account deficit of $32.5 billion — the highest in relation to GDP of any G-20 economy. There are other big structural economic imbalances in terms of employment, inflation, education, credit, et al.
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