It is entirely possible that 2010 will be remembered as one of the great turning points in Turkey's development. During 2010 Turkey's rise as a regional power and global influencer accelerated massively. Here are some of the things that shaped Turkey's rise to fortune.
Coming into 2010 Turkey had agreed visa free deals with Lebanon, Libya, Syria, Sudan and Albania. It also came into 2010 as a growing global power, having spent 2009 meeting with world leaders and signing agreements to increase trade and ties, including the UK and Saudi Arabia.
In December 2009 Turkish stocks were upgraded from neutral to "overweight" by major investment group JPMorgan Chase & Co. This was then followed by a similar move by Fitch upgrading Turkey’s long-term foreign currency rating by two notches to BB+ from BB-. The outlook on the ratings is stable.
Flying into 2010
But Turkey has really stepped it into a higher gear this year. The year was opened up by the promise that trade between Turkey could increase by up to a factor of 3, according to the U.S. Ambassador to Ankara James Jeffrey. Speaking at a lunch hosted by the Turkish–American business council, Jeffrey explained that a series of agreements had been signed in order to increase US trade with Turkey, to bring it up to similar levels as that of the EU.
Next came a strategic alliance with Brazil. One of the largest countries in the world, Brazil huge agricultural sector, rapidly growing services sector and sizeable oil fiels, is currently one of the world's economic powerhouses. Turkey and Brazil are currently two of the world's fastest growing economies, so the two linking together to increase trade and cooperation is highly significant in Turkey's development.
In the rest of the year Turkey signed a massive visa-free deal with Russia, a partial visa free deal with Portugal, and signed, verbally agreed or opened negotiations on increased trade with many more including China, Bosnia-Herzegovina, Slovakia, Kosovo and Peru.
Turkey now has visa-free deals in place with: Russia, Portugal, Syria, Lebanon, Jordan, Albania, Libya, Kosovo and Sudan. It has also taken another step towards a visa-free deal with the EU. The European Commission on Thursday announced that it had struck a deal with Ankara foreseeing the repatriation of illegal migrants arriving in Greece via Turkey though this will only apply to Turkish immigrants at first."
Economic growth and stability
The Turkish economy grew 6.4% in 2010, with the rapid growth of 11.4% and 10.3% year on year in Q1 and Q2 respectively slowing to a much more sustainable level in the second half.
But this is not the first time the Turkish economy has seen such strong growth, but it is currently experiencing a historic level of stability. According to Prime Minister Erdogan inflation fell to the 41 year low of 6.4% in 2010.
Inflation is falling as a result of tight fiscal management by the ruling AK Party, which has paid down Turkish debt consistently throughout its 2 terms. Between 2002 and 2009 the party reduced Turkish public debt from 74% of GDP to 39% of GDP and reduced debt to the IMF from $23.5 billion to $7 billion.
2010 was also the year when Turkey ended its reliance on the IMF. After months of negotiations Erdogan decided that Turkey no longer needed a standby arrangement with the IMF, and to be honest the country has never looked back. It is ironic that in the same year two supposed established markets (Greece and Ireland) were forced to ask for IMF assistance.
For the first time in modern history inflation is falling at a time when the Turkish economy is growing strongly. The banking system is strong and liquidity is high; it seems there is no stopping Turkey.