Global financial crisis and its potential affects over of the Turkey?s economy

Originating from the US housing market crash in the second half of 2007, the decline in asset prices in developed markets resulted in a decline in household wealth and thereby a contraction in domestic demand. This process also inflicted serious damage to the balance sheets of important investment banks. In such a period where a high level of global economic and financial integration existed, these developments quickly started to influence all economies worldwide. Starting from the second half of the 2008, the instability, which arose first in developed countries? financial markets and then spread to developing countries in the course of time, reached alarming levels and transformed into a global economic crisis which is the second biggest crisis after 1929 on the world.Starting from the autumn of 2008, many developed economies entered into recessionary period and growth rates began to slow down in many developing countries. Global crisis affected Turkish economy through trade, financing and expectations channels. Crisis had some positive consequences on current account balance, inflation and foreign debt stock.In order to lessen the adverse effects of global crisis on Turkish economy, a series of expenditure and revenue measures have been taken since mid-2008.Key words: Financial system, global financial crisis, national affects of global crisis, precautions.