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Turkey Defence and Security Report Q2 2009
Market |
Defence |
Report Type |
Market Research |
Country |
Turkey |
Published |
7 May 2009 |
Number of Pages |
58 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
We expect 2009 to be another year of elevated political risks for Turkey, with long existing sociopolitical divisions to be accentuated by a sharp economic downturn. Most worrying is the impact that the expected 3.3% contraction in gross domestic product will have on the labour market. Already, unemployment has risen to a multi-year high of 12.3% at end-2008 and we forecast unemployment to concurrently rise considerably more, to 16.0% by December.
Rising unemployment will pose serious challenges to political stability through the medium term. . In particular, we are concerned about the increased likelihood of public protests, demonstrations and strikes which will be indicative of a steady deterioration in public support for the government. As popular pressures on the government elevate, the risks to policy continuity will commensurately increase. While the ruling Justice and Development Party (AKP) under Prime Minister Tayyip Erdogan has stressed its commitment to proceeding with the EU reform agenda, we believe that policy priorities will increasingly shift toward short-term populist measures at the expense of long-term convergence objectives.
We believe that a deep recession for Turkey in 2009 is all but unavoidable as the global economic outlook deteriorates further and a protracted credit constriction accentuates declines in foreign capital inflows.
While we hold to our view that Turkey will be in a better position to recover over the long term relative several other economies in the emerging Europe region, we also maintain that trend growth is likely to settle below the average seen between 2002 and 2007.
A weak economy, EU pressures and changing threats are likely to reduce both Turkey’s defence budget and number of troops in the long term. Nevertheless, the country remains vulnerable to both internal and external security threats. Turkey currently has the second-largest armed forces in the North Atlantic Treaty Organization (NATO, in part the legacy of a strong military role in Turkish politics.
Turkey is the world’s fourth-largest arms importer and this volume is unlikely to change in the near future. The country’s defence industry is small, but is likely to grow and improve due to the continued boost by the Under Secretariat for Defence Industries through the preferential awarding of procurement contracts and the stimulation of technology transfers. Similarly, a tiny export industry is likely to increase over time as local design and production sees competitive products developed.
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