ISTANBUL (Reuters) - Turkey’s economy enjoyed one of the strongest growth rates in the world last year, boosting the ruling AK Party as it seeks a third consecutive term in a general election on Sunday.
Since the party swept to power in 2002, per capita income has soared, inflation has fallen to historic lows, as have interest rates, and the government’s modest budget deficit and public debt stock ratios are the envy of many floundering European Union states.
Major structural imbalances remain, however, and could yet jeopardize a largely positive outlook for the emerging economy.
Turkey aspires to be within the top 10 world economies by the time of its centennial in 2023, from a current 16.
Its robust financial sector and ability to fund itself independently and at ever lower borrowing costs have put it within reach of a longed-for investment grade rating, which could come after Sunday’s vote.
But rampant growth, a low savings rate and increased dependence on flows of “hot money” have driven Turkey’s external deficits to critical highs.
Although the country recovered quickly from the financial crisis of 2009, it contracted almost 5 percent that year, a reminder of its vulnerability in the event of any global shocks.
Turkey’s increased wealth has also not been spread evenly. The country’s Anatolian heartland and the predominantly Kurdish southeast are still much poorer and lacking in investment.
Unemployment is stubbornly high and economic growth has not so far translated into sustained job creation.
Compiled by Alexandra Hudson; Editing by Sonya Hepinstall