Current accounts deficit problem in Turkey: Causes, impacts on economy and solution proposal

YİĞİT, Hamiyet. Current Accounts Deficit Problem in Turkey: Causes, Impacts on Economy and Solution Proposal, Master's Thesis, Çorum, 2018. Current accounts deficit is one of the important problems that concern many developed and developing countries in the world. It has become a major problem for many countries after World War II along with the increasing liberalization and globalization of international trade. On the other hand, since 1970s, as a result of an increasing degree of financial liberalization on a global level, countries that could not sustain the current account deficits anymore have faced economic crises. The importance of the issue has become clearer after the financial liberalization years of 1990s for the Turkish economy. Although there are many factors causing the current accounts deficit, the reasons for the current account deficits of the Turkish economy have started to change especially during 2000s and structural problems such as dependency on import in capital and intermediate goods, in energy, and also the low saving rates became more decisive on the current accounts deficit. The current account deficit has begun to become more important mainly in terms of economic growth and stability as well as other macroeconomic indicators of Turkey. The factors causing the current account deficit for the Turkish economy, their economic effects, and the solution proposals are analyzed in this study for the period of 2000s. Structural factors such as dependency on import in intermediate and capital and energy, the level and the structure of export, savings deficit, borrowing opportunities, exchange rate policies, short term capital flows, economic instability play important role in Turkey's current account problem. Reviewing the factors causing the current account deficit and constructing suggestions to fix those causes is critical in dealing with and improving the current account deficit problem. In this direction, topics such as industrialization strategies, national energy policies, foreign direct investments, savings-investment balance, interest and exchange rate policies, tourism and technological developments are taken into consideration and evaluated. Throughout the study, data collection, document or report review, content analysis and evaluation methods are followed. Key Words: Balance of Payments, Current Account Deficit, Economic Growth.