Economic stability will be the main concern in 2013

Turkey in 2013 will try to preserve the economic stability achieved last year. Despite many serious debates it can be said that the country had political and economic stability.

Looking to 2013 from the point that domestic and foreign political developments have reached, it becomes evident that the following year will be a very difficult one, so the concerns to maintain stability will become prominent.

When looked at from an economic perspective, we could briefly say that Turkey experienced a year in which macroeconomic equilibrium was preserved, and current account deficit and inflation problems were balanced by sacrificing the growth. This stable atmosphere set a good example of a successful country when the global economies are considered.

However, a decline in growth rates led to increasing complaints from both political authorities and the public. So, beginning from the last quarter of last year, some steps had begun to be taken to revive domestic demand and to increase the growth rates, and monetary policies started to be implemented accordingly. The real implications of these steps are expected to be felt during the following year. Probably, in 2013, how far growth could be revived will be a matter of discussion. The Central Bank will carry on using elastic monetary policy means that were recently put into use in order to prevent the growth rates from reaching a degree that would upset the balances again.

However, as three important elections will come to the agenda beginning from 2014, the government might take action for more rapid growth toward the end of 2013. In this case, the Central Bank’s efforts to preserve stability will be at risk of becoming more difficult.

For this reason, I think one of the most important efforts in 2013 will be to preserve the stable atmosphere that was achieved in 2012.

Political situation

In 2013, sustaining the political stability might be much more challenging when compared to the economic stability, since political conflicts, especially in Syria and Iraq, are expected to increase this year.

After the U.S. presidential election results, Obama is expected to manage the fiscal cliff issue and take initiative in foreign political affairs during the new term. Some steps that might bring about some outcomes on Syria are anticipated and in this respect there is expectation that the conflict is likely to spread into a larger area that may contain Turkey as well.

In addition, the tension in Iraq has shown that there are many options ahead of the country including division and that there is a risk of Turkey getting drawn into the conflict. These developments would also mean increasing tension with Iran.

And all of these will not only remain as foreign affairs, but also influence the domestic political scene especially with regards to the Kurdish issue. These domestic and foreign moves could also pose a threat to the economic stability achieved in Turkey. Since the growth is mostly dependent on foreign sources, the concern of preserving the stability will be prominent in such a political atmosphere.