The Turkish Current Account, Real Exchange Rate and Sustainability
The Journal of International Trade and Diplomacy, Vol.1, No.1, pp. 155-192
Posted: 30 Jul 2018
Date Written: 2007
Embarked on an accession path to the European Union (EU), Turkey needs higher investment ratios to sustain high growth rates for a prolonged period so as to sustain convergence with the EU. In a fast medium-term growth scenario, pressures on the current account are likely to emerge as investment will need to increase while fast income growth will also boost consumption and imports. However, in the case of Turkey, large current account (CA) deficits are also likely to be combined with an appreciating real exchange rate, as in the past few years, in response to robust capital inflows as Turkey gets closer to EU accession.
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