WIIW The Vienna Institute for International Economic Studies - Wiener Institut für Internationale Wirtschaftsvergleiche

In Turkey, record GDP growth, 8.9% in 2010 and 11% in the first quarter of 2011, heightened the country’s attractiveness to international investors. Nonetheless, that rapid growth, coming as it does in tandem with a trade deficit that expanded rapidly and has become alarmingly high, has triggered fears of the bubble bursting all of a sudden. The central bank has not responded by increasing interest rates, but has chosen to impose higher reserve requirements on commercial banks. Signs of growth deceleration have already become visible in the course of the current year; however, the extent to which this can be attributed to monetary policy is still unclear. Fiscal policy may also become more restrictive, with the ruling party having secured a landslide victory in the elections. The forecast hints at the possibility of the boom gradually cooling down.