Economic outlook in Greece and Turkey
Most countries in the world have experienced economic crisis for the last five decades. There are various factors that affect economic growth in the countries. The economic growth in the countries is affected by debts. Most countries have huge debts to pay. This has made it difficulty for the countries to cater for other activities in the country that accelerate economic growth. For example, the countries have found it difficulty to finance other sectors in the country, hence slow economic growth. Also, the countries do not have good financial policy, structural reforms and macro-economic strategy. Some of the countries experiencing economic crisis have recovered because of good macroeconomic policy, fiscal policy and structural reforms. They are experiencing a remarkable economic growth. For example, Turkey has experienced good economic growth. This paper analyses the economic outlook in Turkey and economic outlook in Greece.
Comparing and contrasting economic outlook in Greece and turkey
There is a great difference between the economic outlook in turkey and economic outlook in Greece. The Turkish economy has improved greatly for the last six years unlike the Greece economy. This is according to the current economic outlook. There are various factors that have led to rapid economic growth in the country. Examples of the factors include fiscal policies and structural reforms. Another factor is macro-economic strategy. The country established a sound macroeconomic strategy in 2002 to stimulate economic growth in the country. The macroeconomic strategy has helped the country experience good economic growth for the last six.
The fiscal policies and the structural reforms in the country have also contributed a lot to the economic growth. The macro-economic strategy, the fiscal policies and the structural reforms have incorporated the Turkish economy in to the globalized world. The factors have enabled the country to become an FDI recipient in the region (Republic of Turkey prime ministry investment support promotion agency, 2010).
The structural reforms were established by Turkey and EU to bring changes to some area in the country. The reforms were aimed at increasing the role of the private sector in the country’s economic. This would help improve the efficiency of the financial sector in the country and also the social security system so as to enhance economic growth in the country (Republic of Turkey prime ministry investment support promotion agency, 2010).
The structural reforms have helped improve, macro-economic activities in the country. This has led to reduction in inflation. In 2009, the inflation rate in the country was 6.5%.The inflation rate decreased from 30% in 2002.In addition, the government debt stock reduced from 74% to 45.5 %.This enabled the country to meet the EU Maastricht criteria for debt stock. This is according to the EU report on Turkey’s economy. Moreover, the GPD levels in the country have tripled for the last seven years unlike the GPD levels in Greece. In, 2009, the GPD levels in the country were $618 billion. In 2002, the GPD levels in the country were $231 billion (Republic of Turkey prime ministry investment support promotion agency, 2010).
The economic improvement in the country has stimulated other sectors in the country. For example, the economic growth has affected exports and foreign trade in the country positively. The exports in the country have reached $102 billion. The tourism revenues in the country reached $8.5 billions in 2002 and 21 billion in 2009.
The economic improvements have made turkey be ranked in the world economic scale. Turkey is considered the 16th largest economy in the world. It also considered to be the 6th largest economy when compared with other EU countries. This is according to the GPD figures released in 2009. Before the economic crisis that hit the country in 2009, the country was experiencing strong economic growth. It was the fastest growing economy in the country. The global economic crisis affected macroeconomic activities and financial stability in the country. It also affected external demand in the country. The economic growth rate in the country reduced greatly by almost 4.5% (Republic of Turkey prime ministry investment support promotion agency, 2010).
Greece is experiencing economic crisis. The country is likely to experience a strong sovereignty debt within the next one year. The country has a sovereign debt of about $ 420 billion. This is considered the largest sovereign debt default in the country’s history. The economic crisis in the country is likely to affect other countries like Spain and Portugal The countries experienced financial problems. There are various factors that have led to economic crisis in the country. The Greece economic crisis is as result of the public sector profligacy. The Maastricht criteria established a 3 percent GDP budget deficit limit for Euro zone countries. In 2009, Greece budget deficit was more than 14% percent of the countries GDP. The countries public budget had increased to 115 percent (Lachman, 2010).
Another factor that has contributed to economic crisis in Greece is the fiscal policy. The fiscal policy in the country has led to price inflation in the country. The country lost almost 30 percent in international competitiveness in 2009. This has led to widening in the country’s deficit to almost 12 percent of the GPD. The Fiscal policy in Greece has not helped the country recover from the current economic crisis like Turkey. The fiscal policy has led to more economic problems in the country. is according to IMF report (Lachman, 2010).
Moreover, the country has not had an increase in its GPD in 2009 like Turkey. This is because of the poor fiscal policy in the country. The fiscal policy in Turkey has helped improve the countries GPD. The policy has enhanced microeconomic activities in the country. It helped improve the financial system in the country (Lachman, 2010).
The IMF and EU established a program to help the country reduce its deficit from 14 percent to 3 percent by 2012.The program is also aimed at helping the country improve its competitiveness in the international market. Currently, the country does not perform well in the international market like Turkey. Turkey is ranked the 16th best economy in the world and the 6th best economy in Europe. While Greece is not ranked anywhere in the world and Europe because of the poor performance. Greece plans to restore its competitiveness by improving its domestic prices and rate of inflation in the country. The IMF report has shown that Greece public debt to GDP ratio might rise to 150 % of the countries GDP in 2012.The public Debt to GDP ratio might rise to 175% if the government provides financial support to the banking sector in the country (Lachman, 2010).
Further, Greece does not have structural reforms like turkey. This has led to poor economic growth in the country as the country is not able to restructure diffident areas of its economy. The solvency problems in the country have not been resolved fully by the IMF –EU support package. The country requires a restructuring program to help restructure different areas of the economy. In addition, Greece does not have a storing macroeconomic policy to help the country recover from the current economic crisis. This has made it difficulty for the country to uxorious economic growth like turkey (Lachman, 2010).
The economic outlook in Turkey and the economic outlook in Greece differ a lot. For example, Turkey has experienced strong economic growth for the last six years because of various factors. Greece has not experienced economic growth. The country currently experiences deep economic crisis. The macroeconomic strategy, fiscal policy and structural reforms in Turkey have contributed to the strong economic growth. The structural reforms have enable the country improve different areas of the economy. For example, they have helped improve the financial system in the country. The country does not have any sovereignty debt like Greece. Greece does not have a strong fiscal policy and structural reforms. Also, the country does not have any macroeconomic strategy. This affected economic growth in the country.
Lachman, D. (2010).The Greek Economic Crisis and the U.S. Economy. Retrieved from http://www.aei.org/speech/100150 on 30/09/2010.
Republic of Turkey prime ministry investment support promotion agency.(2010). Economic outlook in Turkey.Retrieved from http://www.invest.gov.tr/en-US/turkey/factsandfigures/Pages/Economy.aspx on 30/09/2010.