Low foreign trade, low growth

Foreign trade indicators from the first seven months show us that the 2014 growth target of 4 percent will be difficult to achieve. 

The Turkish economy was integrated rapidly with the world economy after 2000 through both exports and imports (particularly imports). The most sensitive indicator of Turkish economy related to growth is foreign trade, analyses show. When foreign trade speeds up, economic growth also speeds; its slowdown points to a shrinkage in the economy.

Integration increasing 

Turkey had a total foreign trade of $83 billion at the beginning of 2000; this commerce constituted 31 percent of the national income. The rapid loss of value of the Turkish Lira (major devaluation) experienced in 2001 worked well for exports. As a result, in the 2001 crisis and following years, foreign trade increased a little and its size reached 37-38 percent of national income.

Integration accelerated in following years. Foreign trade accelerated as well as economic growth in connection with it.

The import leg of foreign trade particularly grew faster than export. The fact that a series of reforms were done after the 2001 crisis built confidence in foreign investors, also the political attraction of the Justice and Development Party’s (AKP) one-party government, sped up the inflow of foreign capital. This, in turn, accelerated imports and, to a certain extent, exports.

When the foreign capital inflow prompting more money to be spent on imports stimulated production focusing on the domestic market, particularly construction, economic growth sped up.

As a result, increased imports and increased exports, even though the latter lagged behind, increased trade with the outer world and its share in national...