Is there a Turkish business cycle
Yes, possibly so. Two thoughts on the nature of the Turkish business cycle are in order. First, except 2008 the cycle is local rather than globally induced, and it is not periodic. Second, there are periods extending roughly over two decades that characterize the cycle.
If we hold this second conjecture true, the cycle is like a 15-20 years Kuznets swing. They all began with an aura of success, the finally found cornerstone of stability and prosperity, and were hailed towards their mid-lives with laurels that bordered euphoria.
Then, the victorious march turned into slouching towards the drift. If there is a sea-changing move, depending on the nature of the funds collected and the credibility of the road map, the whole outlook might change all of a sudden. There seems to be only one way to achieve this quickly and it is political change. There are varieties of business cycles. There are Kondratieff cycles, medium-term cycles, and short-run cycles and so on. They may be superimposed at times.
1965 is the first peak year, but momentum is immediately lost. A momentum of the same magnitude is observed c. 1973 due to sharply rising workers’ remittances.
1973-77 is an interesting period: the consequences of the oil shock were not translated into domestic prices, and the Cyprus Operation took place. The US embargo took off in 1975. 1977-80: the slippery slope towards the economic decisions of January 24 and the coup d’état. The economy dived down and rebounded after Özal.
This momentum ended in 1989, and the capital account was opened up. The second through, though not as deep as 1980, occurred in 2001. As AKP decided to implement the Dervis-IMF programme in 2003, the economy jumpstarted in a way reminiscent of Ozal’s heyday. The AKP momentum died off in 2006. We may technically be at the end of the post2001 Kuznets cycle. It has possibly come to its limit in 2014, but it somehow survived without major change. This has happened at the expense of salaried employees who got impoverished. By the same token, macroeconomic equilibrium is disturbed, and we are drifting away from equilibrium day by day.