Turkey's rapid growth surprises many, but this is an expected and must-be-expected development.
This is because Turkey is now beginning to keep up with the Asian economies that started to grow rapidly after the financial crisis in the late 1990s. President Recep Tayyip Erdoğan's three years in power have been marked in recent days. In this three-year period, Turkey has implemented a de facto "presidential" system similar to the presidential system that will be introduced in 2019. The Presidency has moved away from being a merely symbolic political office and has been built as a new example of direct democracy and a new political institution in these three years, by consolidating active ministries, bringing actions directly to the fore and fulfilling popular demands. Of course, one of the first places where this change has been reflected is the economy. We have very tangibly seen in this period that the state has intervened in the economy as a market builder.
Important historical experiences tell us what kind of creative solutions states have developed during such historical transition periods. When the Great Depression of 1929 broke out, the 31st president of the U.S., Herbert Hoover, was in office. The Republican president thought that the system would spontaneously get back on track in the face of the crisis. However, the crisis did not concern the financial system alone, but also engulfed the real economy and further intensified, revealing Hoover's eventual desperation. Thus, many large and small incidents that happened during and after the Great Depression brought an end to the Hoover administration and brought Franklin D. Roosevelt to power. Certainly, Roosevelt's New Deal policy was a lifesaver, both for the U.S. and all other countries affected by the crisis. The New Deal policy, which aimed for the reinvigoration of the economy and highlighted government expenditures in almost all respects, enabled the recovery and reconstruction of the U.S. economy. Many institutions and economic laws and practices that regulate both capital and labor markets are rooted in Roosevelt's New Deal, and contrary to what is thought, these are not statist but market-friendly regulations. In fact, Erdoğan's presidency is a period of this kind and is literally a New Deal for Turkey.
We see the effects of this in the pace of Turkey's growth. Turkey grew by 5 percent in the first quarter, and as leading indicators for the second and third quarters point out, we will see higher growth rates in the coming period.
We see the improvement in investments, which are one of the most important items in the growth data, in the net foreign trade and domestic consumption data as well, and there is also a continuation trend here. This growth trend might slow down as of the last quarter, but we should note that this slowdown will not be so sharp as to drag down the overall annual growth below the average of the first three quarters. In this case, the Turkish economy will have ended 2017 with a growth trend approaching the 2010-2011 levels. This should also be considered an advantageous start for 2018. We need to ask two important questions here. Is this growth trend inclusive and sustainable? And on which sectors will it concentrate? These two questions, along with the following ones, have a single answer.
What economic policy will Turkey implement both on its own and in the changing political and economic conditions of the world? Also, what will be the monetary and fiscal policies that are the main components of this economic policy, and what reforms and what changes will the banking and financial system and capital and money markets, which are one of the most important topics of this issue, will undergo?
The answer to these questions, including the 2019 election results, will show us the new path of Turkey in the coming years. Within this framework, this growth trend and Erdoğan's economic perspective will largely determine the 2019 election results. This perspective requires an open and market-friendly economy that goes on with strong reforms. These strong reforms correspond to a production-oriented and inclusive growth and development approach that protects technology and entrepreneurship, instead of protecting rent areas, and that spreads growth across all segments. The state has intervened in the economy in Turkey through institutions such as the Credit Guarantee Fund (CGF), which has emerged within this framework.
The state intervenes in the economy not only in the periods of crisis, but also in the periods of historical transition. For instance, if some had said that Turkey would introduce practices such as the Sovereign Welfare Fund (SWF) and CGF some 15 years later in the years following Kemal Derviş's program, which based the Turkish economy in the Washington Consensus framework after the 2001 crisis, he would have been treated like a mad man.
Well, even if it is clear that these practices will be successful, we are facing similar accusations. We will constantly tell the world that these are market-friendly practices. I would like to note that Turkey will do away with the regimented nonmarket economy, as it has swept the tutelary political system.
From this point of view, as can be seen in the CGF example, we will see Turkish public authority eliminate nonmarket habits and powers and introduce the institutions and practices required for open, inclusive, fair and production-oriented growth and development in the coming days. So, no one should doubt that Turkey will have a production-oriented and inclusive growth.