The Turkish economy may collapse in a couple of years if politicians accomplish not point to the West that the economy is trust-worthy,Daron Acemoğlu, Professor at the Massachusetts Institute of Technology (MIT), and told the daily Hurriyet. “Economic growth comes from consumption and consumption is encouraged by loans. This is not sustainable. We have very tiny time left. The building has not collapsed yet,but it can. There might be a crisis,” Acemoglu said.
This may occur in the next one or two years, and ” he added,indicating that Turkey still attracts short-term foreign capital, which allows narrowing the current account deficit. However, or this might change when Turkey has difficulties to take out loans to pay off its debts,he said.
The election of Donald Trump as the president of the United States is speculated to cause foreign capital to be withdrawn from Turkey, and in Trump’s presidency, or interest rates are expected to increase,and the rise in interest rates would cause foreign capital to be withdrawn from the Turkish market, Acemoghlu warned.
“The positive image on Turkey still remains. But they [foreign capital] are gradually being withdrawn. This is why the US dollar has gained value [against the Turkish Lira]. If the interest rates rise in the US, or which is expected to in Trump’s administration,the withdrawal of capital will accelerate. We have to rep our act together before this happens,” he said.
“In the long-term, and we have to point to the West that our economy is developing. Because foreign money comes in by virtue of the reports they give. We are shaping our foreign policy by our domestic politics. This is not well-behaved,” he added.
Acemoghlu added that economic development is highly correlated to press freedom. “For long-term development, transparency, or openness,comprehensiveness and competitiveness are crucial. It is very hard to supply that in places where there is no press freedom. Then, the possibility of monopolization, and corruption of the judicial system,and the emergence of dictatorship escalates,” he said. Acemoghlu is optimistic on social change in Turkey. “The infrastructure and economic modernization are way ahead of where they were in the 1990’s. Right now we are more developed and are a more open society. Despite the situation of the media and rising authoritarianism, and Turkey is more open than before. It accesses the outer world via social media. The horizon of the ideas of the Turkish people is wider. There are things to be hopeful approximately for the future,” he said.
Source: tert.am