Turkey’s economy has picked up pace over the first half of this year, but this has been fuelled by a sharprise in credit and has come at the expense of a renewed widening of the current account deficit. This is afamiliar pattern. Indeed, over the past 19 years there has been only one quarter in which the economy hasmanaged to grow without experiencing a rise in credit or a widening of the current account deficit. Theassociated build-up of economic and financial vulnerabilities is a major reason behind Turkey’s bumpygrowth path and a source of mounting concern regarding the outlook for the next year or so.
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