The Effect of Euro on Turkish foreign borrowing

Abstract

ABSTRACT With its educated young population and dynamic economy, Turkey performed a fast growth since 1970, amounting to 4.6% on average. Domestic savings have usually not been enough to fuel this growth and especially the high borrowing need of the public sector has been the subject of many economic debates in the late 1990s. Raising low- cost foreign borrowing constitutes a significant factor for Turkey in this aspect, however the foreign funds have not been abundant in the 1990s. Will the launch of Euro change the picture? Turkey has close economical, social and historical ties with the Europe and has been a well known player in the European financial markets. If the Euro is to create a suitable foreign borrowing environment for Turkey, it will not only relax the domestic financial markets but also bring wider economic consequences.