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Banking

Turkey’s growth defies the pessimists

Many economic indicators in Turkey remain strongly positive despite internal political crises and flashpoints on the country’s borders. David Judson reports.

Istanbul at the centre

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EVENTS IN RECENT months have raised questions about Turkey’s ability to sustain its head-spinning recovery and growth since the devastating financial crises of 2001. And more twists and turns are surely in store as the country navigates the dynamics of Kurdish separatists in neighbouring Iraq, a looming US-Iranian showdown over nuclear intentions, unending trouble with Armenia in the volatile Caucasus next door. At home, there’s a new government, divisive internal debate about the bedrock of Turkey’s secular constitution, and vulnerabilities springing from high oil and gas prices in a country surrounded by producers but itself energy-poor.

However, Turkey has continued to defy the pessimists. Over the summer, markets held their breath as America’s sub-prime mortgage crisis tempered growth in Europe. Turkey’s stock market simply kept on climbing to new records, the currency continued to strengthen and a strong flow of foreign investments were maintained.

That international turmoil was a mere tremor compared with domestic events of a few months earlier: bickering between the president and the prime minister, and reports of a copy of the constitution being flung across the table in late 2000, ignited a meltdown that ultimately closed down a quarter of the nation’s banks.

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