Property Investment in Turkey - Economy & Political Outlook
The Turkish army has always had a strong bearing on the country’s domestic and foreign policy and still does to this day. Despite question marks lingering over the long-term viability of this situation, there is also a widespread enthusiasm for the development of a more democratic state and, above all, EU membership. Turkey has already deployed a pre-emptive strategy of meeting important EU criteria such as the strengthening of political dialogue, with a particular focus on human rights issues and the establishment of mechanisms for harmonising legislation and practices.
This is certainly a step in the right direction, but EU enlargement senior officials insist that a loosening of military influence on the state must occur if Turkey is ever to join their club and reap its benefits.
Economic stability has improved and Turkey has most certainly come a long way since the crisis of 2001, when bond yields were 90 per cent on average and inflation rates reached a panic-inducing 80 per cent. As a result of the deployed “Economic Stabilization Program”, fears of economic decay have dissolved and inflation has dropped to single-digit levels. Indeed, the Turkish economy has yielded impressive results in the last four years, with a cumulative 3 per cent growth in GDP. The majority of this growth has stemmed from private consumption and investments and is projected to be stable over the coming years, lying at the five per cent mark.
In May 2006, global financial markets were hit hard by increasing volatility and sharp corrections in all asset classes. The situation affected Turkey somewhat more than any other emerging market. Mainly because of its large external deficit, Turkey was perceived as more sensitive to a rise in global interest rates. The inflation shock triggered a weaker new Turkish Lira (RY) and , as a result, political uncertainty increased, although the currency has now recovered most if its losses and the economy as a while has made rapid progress since.