For many years, political failures cast a shadow over the Turkish economy causing it to perform below its full potential. High levels of political uncertainty throughout the 1990s had a negative effect on a number of areas, including the economy. During this period, high inflation, accumulation of foreign debt, high budget deficit and high current account deficit left the economy vulnerable to domestic and international shocks. A series of coalition governments failed to take necessary precautions and to adopt appropriate policies. It was under these circumstances that Turkey experienced one of the most severe economic crises in its history in 2001.
The Turkish Economy During the Justice and Development Party Decade
During the 1990s, political uncertainties in Turkey had negative effects that left the economy vulnerable to public and foreign debt due to high inflation, high budget deficit and high current account deficit. Coalition governments failed to address these problems. Following its rise to power in 2002, the AK Party developed a new perspective for the economy, politics and foreign policy collectively referred as the New Turkey. The government emphasized fiscal discipline, structural transformation and privatization. During this period, Turkey rapidly recovered from the negative effects of the 2001 financial crisis and reached a steady growth rate. The country also survived the 2008 global crisis with minimum damage. The government seeks to meet its targets for the centennial of the Republic’s establishment.
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