Turkey has had a very long period of economic growth and stability since 2002. If the effects of the international financial crisis of 2008 are to be put in parentheses, a very long and calm period of economic growth has been the main reason why the Justice and Development Party (AK Party) government has had such steady and growing support from voters. The Turkish economy, which had a rather limited capacity of exporting consumer goods, has multiplied its exports between 2002 and 2012 by four times, while diversifying outlets. The main trading partners of Turkey remained EU countries, but the Middle East, Russia, China and African countries have also assumed an important place during the last decade.
Investments are due to come from EU countries or from other countries through the mediation of EU companies, especially Dutch undertakings. Switzerland, which remains a "safe haven" within the EU's single market, is also an important partner regarding financial transactions as well as arms sales.
To have a steady and sustainable economic development is the dream of all democratic countries, but the 2008 crisis has left deep scars in Europe. Unlike the U.S., European countries have not really overcome the nasty effects of the last crisis, and growth is still too slow to create employment. The European Central Bank has been inundating the banking sector with money, however the banks are too reluctant to give away credit and investors are too cautious because of an almost deflationist atmosphere in which consumption does not rise.
Compared to eurozone countries, the Swiss economy is thriving, but again, Switzerland has a small economy compared to the immense financial volume it handles through its banks. The Swiss franc remained a dependable asset, and because of this, large amounts of Swiss currency were included in portfolios in European funds, especially among local communities.
Market pressure has been so powerful recently that the Swiss Central Bank has stopped buying foreign currency in order to keep the parity of the Swiss franc lower than the euro. As a consequence, the franc has been revaluated by almost 24 percent in no time, creating severe turmoil in stock exchanges. The currency stabilized a day later, but its revaluation looks irreversible. All transactions done in Swiss francs will have very unexpected consequences, which is not good news for some portfolios.
This has brought to the agenda once again the position of Switzerland in Europe and whether it would be a good idea to bring the Swiss economy within the EU single market – in a nutshell, to get Switzerland in the EU. This is a very long and tiresome debate and, politically speaking, nobody really knows how it might end. But on the economic side, there is a more and more visible need for convergence. The Swiss franc has been revaluated too swiftly and the Swiss Central Bank could not really withhold the pressure exercised by markets. Turkey is having similar problems with interest rates. The European Central Bank is also having difficulties to ignite a durable growth dynamic for EU economies. Everything is pushing governments and central banks to have a better, more convergent strategy to have more resilience toward international market pressures. The problem is political, and in the medium term, Turkey has to get much closer to the EU in terms of governance and institutional ties if stability and growth is the ultimate objective. The Swiss example is very eloquent in this chapter.