Financial Stability and Economic Competitiveness in Turkey

Abstract

Since its independence, in terms of economic competitiveness and financial performance, the Republic of Turkey has undergone volatile trends. As a result, numerous indications affecting Turkey's competitive position and how the economy might be supported while keeping its debt situation in mind were examined. Initially, a shortage of human capital and hard currency reserves hampered rapid economic growth and welfare creation, with institutional improvements prioritizing long-term development with low inflation and financial stability. Private banks began to acquire a market share in the second half of the 1980s. The 1990s were called the "lost decade" of banking and financial stability, and they culminated in a catastrophic banking collapse in 2001. After 2002, the Turkish economy grew at an unu- sually rapid pace while maintaining a low and dropping inflation rate. The extent of economic diversity was also a major issue for Turkey's competitiveness, with inve- stments standing out as one of the additional conditions for increasing competitiveness (World Bank, 2019). It is difficult for the Republic of Turkey to create domestic savings to support long-term growth while maintaining low and stable inflation and navigating the complexity of the Turkish economy. For years, the Turkish economy has been nearly free; nevertheless, the global financial crisis has continued to distort the picture and threaten global economic and financial stability (Terzi, 2015, p. 269). To substantially affect the country's financial strength and economic competitiveness, the government must respond promptly and flexibly based on performance and an enterprise- oriented strategy.