The Economic

Situation in Turkey

 
 
 

Vocabulary

bridge	whether	sector (2)
subway	imposing	Bosporus
impose	mosque	ambition
fiscal	forefront	construction
brake	event (2)	put the brakes on (2)
debt	plummet	accumulate
loan	pain (2)	prong (2)
repay	hike (2)	interest rate
notion	stick (2)	appear (2)
IMF	liquidity	approach (2)
tackle	bailout	structure (2)
CEO	core (2)	investment
cope	agenda	meanwhile
ignore	ordinary	trigger (2)
rapidly	massive	slowdown
reform	prospect	raise the prospect
call (2)	inflation	central bank
reject	weather	determined
exist	priority	downgrade
	disaster	concrete (2)

 
 
 
 

Video: Turkey’s Economic Situation

 
 
 
 

Transcript

Whether it’s a bridge over the Bosporus, an Istanbul subway system, or an imposing mosque, Turkey’s president, Recep Tayyip Erdogan is known for his big ambitions.

The construction sector has been at the forefront of the country’s economic development.

But recent events have put the brakes on Turkey’s economy. Turkish banks and companies have accumulated $470 billion of foreign debt, and as a value of the lira plummets; it’s getting ever harder to repay those loans.

Turkish President Recep Tayyip Erdogan has ignored calls for interest rate hikes, and rejected any notion of a bailout from the International Monetary Fund.

Experts say a multi-pronged approach is needed to tackle the country’s economic problems.

Bahadir Kaleagasi, Turkish Industry and Business Association, CEO: “Turkish business and investment environment needs structure reforms: labor market reforms, fiscal reforms, educational reforms, the old reforms that are necessary to cope with the twentieth century in the Digital Age. So they have to be prioritized in Turkey’s agenda.”

Ordinary Turks are already feeling the pain: prices are rising rapidly. And there are fears that a slowdown in business could trigger massive job cuts.

In Germany some politicians have raised the prospect of offering Turkey financial aid. But economists say such a move wouldn’t get to the core of Turkey’s problems.

Erdal Yalcin, Professor of International Economics: “It would be a really bad idea to make direct payments in order to support the Turkish economy. Turkey’s problem is not a liquidity problem; there are structural problems: inflation is too high, and interest rates in the central bank are too low.”

For now the Turkish president appears determined to stick to his existing economic policy.

Meanwhile, two major credit rating agencies have downgraded the country.

Without a concrete plan of action, Turkey could be on course for an economic disaster.

 

 

Questions

1. The main engine of Turkey’s economic growth has been manufacturing: cars, machines, electronics, ships. True or false?

2. Do Turkish businesses have more credits or debts?

3. Is it getting easier or more difficult to repay their loans? If yes, why is it getting more difficult?

4. What are some immediate, short-term actions that the government should take? Why might Turkish President Recep Tayyip Erdogan reject them?

5. Should the government make long-term changes? What should and shouldn’t the government do, according to economists?

6. Are average Turks happy? How does the average citizen feel?

7. There is complete agreement on a financial aid package. Is this right or wrong? Why do some economists disagree on such a stimulus?

 

A. Has your nation experienced a financial crisis? What happened?

B. Certain countries are more vulnerable to crisis. What do you think?

C. Why do crisis occur?

D. What will happen in the future?

E. How can crisis be avoided?