The global financial starts to hurt the Turkish economy

[Prof. Dr. Mukerrem Hic]

It was obvious since the beginning of September 2008 that the Turkish
banking system and the Turkish economy stands to suffer seriously from
the global financial crisis. This was echoed by may CEOs of Turkish
private banks as well as by the report of Standard and Poor's on the
Turkish economy. The foreign banks will have to contract their lending
of credit to Turkish banks on account of the strains of the crisis.
According to an UNCTAD report, Turkey's position among countries that
receive the highest level of DPIs fell 6 steps down to 23rd. In fact,
outflows of funds from Turkey in the first week of October have
resulted in a 16% increase in the dollar/Turkish Lira exchange rate.

All of the above does not necessarily mean that the Turkish economy
will face a crisis of 2001 proportions. But certainly the GDP growth
will slow down and the value of foreign exchange will go up, as will
the inflation rate. There will be further increases in unemployment,
leading to social unrest and political turbulence.

A concrete example of the financial crisis is the result of the public
auction to build a nuclear plant in Turkey. As it became clear that
the global financial crisis would make it very difficult for any
company to find funding to finance such a massive project, many
economists suggested that the September 24th auction date to be
postponed. But Tayyip Erdogan and the AKP government, who had a rosy
financial picture in their heads, decided to go ahead, suggesting that
the global financial crisis creates opportunities for Turkey.

The result of the auction was that of the 13 interested firms, 6
decided to enter the auction and only 1 actually submitted a bid: It
was the Russian firm who built the Chernobyl plant. The auction was
canceled due to lack of competition.