Turkish economy in good shape

The recent move by the Turkish government to slow the influx of hot money by short term speculators seems to have worked. The government cut interest rates by .25% to 6.25% in January, which had the desired effect of creating an outflow of hot money, slowing the economy back to normal growth patterns.

This should help to ease the current account deficit as economists believed the lira was overvalued against the dollar. Its devaluation will have a positive effect on exports as they will become more competitive.

The hot money was used to finance the current account deficit which means the outflow could cause some short-term problems, but with correct management the medium and long-term benefits are far greater.

Experts don’t regard the fact that the level of imports is higher than the level of exports as being a real problem as a lot of the imports are being used to manufacture goods.

More good news came in the form of the unemployment figures which showed a 2.1% drop in 2010, which equates to another 1.3 million people being employed. Unemployment figures are still high at 11.9%, although the government expects this to fall below 10% by the end of the year.

They are currently looking at measures to increase the level of employment, although steady economic growth should continue to provide more jobs. The number of people now employed in Turkey is 22.5 million. While the Turkish economy is not entirely free of problems, the policies are in place for long term stability.

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