The rapid pace of growth seen in the Turkish economy lately has both generated remarks of applause and concern. On the one hand, the economy of Turkey, as reported by the agency TurkStat, has risen 11% year-on-year for the first quarter of 2011, outpacing the expectation for a 9.6% rise, and a prior 9.2% growth in Q4 2010.
On the other hand, trade data is showing the Turkish trade deficit widening sharply, with imports rising 43% and exports a meager 11.7%. This asymmetry of Turkish economic expansion, according to analysts, is being fueled by rising domestic consumption propped up by an increase in credit growth. If measures are not taken soon to quell this booming rise in debt and rampant consumption, the Turkish economy risks overheating and entering a harsh downturn later this year.
So far the Turkish central bank disagrees, arguing in their latest meeting minutes that they view the current growth as healthy and see no signs of overheating. But the growing deficit in the nation’s current account could force the bank to hike rates in the near future to dampen the booming domestic demand that could eventually cause a bust in the economic growth of Turkey.
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