The term economics is used to express saving or reduce consumption in order to develop the internal organization of companies and institutions.It is scientifically a social science based on theories of management and economics.In 1932, Lionel Robbins defined economics as a science concerned with studying the behavior of society, as a relationship between forests and scarce resources. Multiple uses.
In general, economics is concerned with two types of economic analysis: microeconomics and macroeconomics.
Microeconomics is the economic behavior of institutions, individuals and companies. The analysis of the economy is based on the study of the volume of demand from buyers and the volume of supply from the sellers. At each expected price point of the unit, it can reach the quantity at which the market becomes in economic equilibrium, or the ability to respond to market changes. For its study of the requirements of supply and demand, so called analysis of the study of the forces of supply and demand.
Macroeconomic analysis analyzes and studies the economy as a whole.It also studies the impact of monetary and fiscal policies on which the state is based.The macroeconomic analysis shows the extent to which the country’s economy is affected by economic factors, such as the impact of national income, unemployment, investment spending, inflation and consumption.
Macroeconomic analysis is concerned with economic factors affecting the economy and national income, including long-term effects, capital accumulation, technical growth, and labor force development.
There have been many attempts to link macroeconomic and microeconomics as one until it is found that the macroeconomic structure must be fully supported by microeconomics.
The economics studies the state’s economy, its structural situation and its policies to promote the economy, achieve self-sufficiency and achieve development in all areas of the economic sector.
In the past, the Turkish economy was based solely on agriculture, but in the 1920s, thanks to the government’s guidance, the number of factories continued to increase. In 1923, there were only 118 factories and reached 1,000 in 1941. Today, there are about 30,000 factories in Turkey, but agriculture has been one of the most important economic activities, providing 58% of the country’s total workforce. However, the volume of agricultural production accounts for only about 20% of the value of all goods and services produced in Turkey. Value of agricultural production revenues.
A look at the history of the Turkish economy and economic growth
The expansion of global markets and the availability of credit following the 2001 financial crisis led to a significant increase in the movement of capital from capital markets to developing countries. During this period, the large availability of liquidity in global markets, with real interest rates in Turkey, made the country attractive to capital. As a result, the economy grew 6.2 percent in 2002, recovering from a contraction of 5.7 percent in 2001. The country also Growth of 5.3 percent in 2003, 9.4 percent in 2004, 8.4 percent in 2005 and 6.9 percent in 2006.
Economic growth during this period can be attributed to an increase in the volume of goods and services exported, as well as to the recovery of domestic demand as well, at the same time, where foreign direct investment contributed significantly to domestic production. Thanks to all these reasons, as well as the economic austerity program and various preventive measures and after the crisis, the Turkish economy gained considerable resilience against external shocks and recorded one of the fastest growth periods since 1950 between 2002 and 2007.
As for the 2008 global financial crisis, it affected the Turkish economy strongly in terms of trade relations to some extent. In 2009, it led to a recession of 4.8%. It comprises the vast majority of the country’s foreign trade volume.
Indeed, the Turkish economy has recovered as a result of establishing trade relations with new markets, coupled with increased domestic demand and exports.In 2010-2011, the Turkish economy performed well, with an annual growth of 8.5 percent to become the second fastest growing economy in The world is behind China, which grew 9.2 percent in 2011.
Turkey’s economy continued to grow for several reasons, including the government’s commitment to fiscal discipline and regular economic policy, despite the impact of the eurozone countries due to the global financial crisis.
In 2012, the Turkish economy achieved a modest growth of 2.2%, which does not deny that the Turkish economy after the 2001 financial crisis and the period of great downturn at that time, recorded consistently high annual growth until the 2008 global financial crisis.
According to the World Bank’s classification of countries, which call countries with per capita GDP less than $ 1105 in “low-income” countries, countries with per capita GDP between $ 3976 and $ 12,275 as “middle-income” countries, with countries with GDP per capita greater Turkey’s plan from 2013 to 2015 was to increase per capita GDP to $ 12,859 by 2015, becoming a high-income country by World Bank standards.
In addition to previous improvements in economic growth, the AKP government has taken a series of long-term precautionary measures to tackle rising inflation, but a serious lack of economic stability caused a sudden rise in short-term interest rates during the 1990s that weakened the Turkish lira and inflated spending. The excessive year even domestic savings shrank during that period and domestic demand increased and this prompted the government to save money by external debt.
During the 1994 economic crisis the strong weakness of the Turkish lira caused costs to increase, while the government postponed pricing arrangements for the public sector to immediately see double-digit inflation.
High inflation has weakened the Turkish lira over the years, prompting successive Turkish governments to meet their financial needs by printing high-value banknotes and turning every Turkish citizen into a millionaire.
After the 2001 financial crisis, the inflation targeting system adopted by the Turkish government then defined and declared the desired inflation levels. By implementing this system, the central fiscal policy instrument available to the central bank was short-term interest rates, such as early warning against inflationary pressures from the central bank’s expectations. On inflation and other economic indicators serve as a guideline for the central bank during decision-making on interest rates.
With the 2001 financial crisis, Turkey moved away from monetary policy based on the target exchange rates and adopted the policy of targeting inflation as an alternative. In 2004, the Turkish economy recorded a single-digit inflation rate of 9.4 percent, after a large inflation rate of 54.4% in 2001. The immediate growth of the economy, coupled with political will, popular national attempts and economic stability, prompted the AKP government to issue a decision to drop six zeros from the Turkish lira 14 years ago.
Is the Turkish economy on its way to collapse?
Reports confirm that there has been a significant decline in foreign direct investment in Turkey in the last 3 years.It is revealed that foreign direct investment in Turkey has declined in the period from 2016 to the end of 2018.A report of the United Nations UNCTAD showed that in 2015 Turkey attracted about 18.989 billion Investments in Turkey fell to about $ 13.705 billion in 2016, and in 2017 to $ 11.478 billion, the report said.
Fitch downgrades Turkey’s credit rating to BB with a negative outlook
Fitch Ratings downgraded Turkey’s sovereign debt rating from BB to BB- with a negative outlook, saying the central bank governor’s isolation highlighted the deterioration in the bank’s independence and the coherence and credibility of economic policy.
It also revealed its expectations that Turkey’s economy will continue to shrink this year due to the difficulty of the government in making the required adjustments, following the loss of the Turkish lira more than 30% of its value against the dollar in 2018, and added that any premature monetary easing could renew the pressure On the lira, however, any significant slowdown could hamper Turkey’s commitment to fiscal discipline.
The report came at a time when the Turkish economy is suffering from a severe crisis due to the decline of the Turkish lira against the dollar to its lowest level in 2018, and the high inflation rate to its highest level in 15 years, exceeding 25% last November, and improved slightly to 19.7% In February, the central bank raised interest rates by 11.25 percentage points to 24 percent, leaving most companies unable to repay their debts.Turkey’s economy contracted by 3 percent in 2018, more than expected, in its worst performance in 10 years.
Turkish lira lower against the dollar
The Turkish lira has fallen nearly 40% against the dollar this year due to the deterioration of relations between the United States and Turkey, also revealed the group “Ashmore” global investment management group also revealed that Turkish President Recep Tayyip Erdogan risks pushing the Turkish economy towards the collapse similar to the economic collapse that occurred in some countries Latin america.
The London-based Ashmore Group also compared Turkey’s economic situation to Venezuela’s economic situation. Although the Turkish economy is more diversified than the oil-based Venezuelan economy, Turkey is on a path towards economic collapse. .
The world’s largest banks have begun what could be a massive campaign to boycott the Turkish lira, whose value has collapsed significantly over the past months, amid an economic crisis that has plagued the Turkish economy, Bloomberg reported.
Among those banks, Credit Agricole, Societe Generale and France’s Royal Bank of Canada, have withdrawn one by one of their previous recommendations to buy amounts of the local currency, after their price against foreign currencies hit a low.
The Turkish lira is in a steady decline and is witnessing a significant and noticeable decline, political economy professor Dr. Karim Al-Omda told Extra News Channel about the economic collapse of the Turkish economy.
In remarks to Adnan Onverde, chairman of the Gaziantep Chamber of Industry in the Turkish newspaper Al-Zaman, she explained that the state debt exceeded 160 billion pounds for the real sector in Turkey, and suggested in this regard to give companies documents that can be used in other payments to compensate for these debts.
He also called for the need for industrialists to obtain a document in return for their dues from the authorities, on the basis that the document granted will help the state to pay its debts and become an outlet for companies with our vision of the decline of market conditions.
Onverde said that there was a major market bottleneck that occurred as a result of the authorities’ failure to pay their debts to contractors and the private sector.He also proposed to provide a document for companies to pay their debts to the private sector or other government debts in front of their dues from the government.
He also said that if a system and methodology were put in place that would include government debts that exceeded LBP 160 billion and VAT revenues, this would be of great importance to industrialists and businessmen, which would have a multiplier effect and increase the workload. Taking this step without further delay will create market trading and this breakthrough will have a positive impact on trade.