Turkish President Abdullah Gul in a speech Thursday avoided focusing on the short-term economic challenges faced by his country, stressing instead its positive long-term growth prospects.
Gul said the longer-term outlook for Turkey is strong, and the country aims to become the 11th largest economy in the world by 2023, the centennial of the republic.
Speaking at the American Turkish Society in New York, Gul noted strong ties with the U.S. and encouraged investment in Turkey's energy sector, citing a consistent 7% gross domestic product growth rate over the last few years.
Despite his optimism, Gul's goal for the economy would be a big jump for a country that in 2007 ranked as the world's 17th largest economy.
Turkey, along with other emerging markets, is affected by the expanding consequences of the global credit crunch. Turkey's GDP growth slowed considerably in the second quarter as rising inflation and high interest rates ate into consumption and investments. GDP grew by just 1.9% from a year earlier, down from a revised 6.7% annual growth rate in the first quarter and the slowest rate since Turkey's long expansion began in 2002.
JPMorgan Securities this week slashed its forecast for Turkey's growth in 2009 to 4% from the previous estimate of 6%, and well below the 5.5% potential rate of growth.
On Thursday, Gul didn't discuss the credit crisis, nor did he address the political uncertainties within Turkey. Last year, a political crisis broke out when opposition parties boycotted his presidency on the grounds that he wasn't a secularist and, therefore, a threat to the Turkish state.
Still, how susceptible Turkey is to the turmoil in the financial markets remains to be seen. In a note to investors Wednesday, Standard & Poor's noted that unlike other emerging markets in the region, "Turkish banks benefit from diversified funding and good liquidity, with relatively moderate reliance on international wholesale funds."
But the ratings agency also noted that an environment of inflationary pressure, domestic political turbulence and widened international funding margins still keep risk elevated.
Earlier in the week, the European Bank for Reconstruction and Development's board of directors recommended that the bank should start investing in Turkey.
In response to recent reports that have pointed to a strong sense of anti-Americanism brewing in Turkey, Gul clarified that Turks have expressed their dislike for U.S. policy and the war in Iraq, but the sentiments were limited to policy rather than the country.
Gul encouraged U.S. companies to invest in Turkey's energy sector. The country sits at the end of the Baku-Tbilisi-Ceyhan pipeline, or BTC, which is the world's second-longest pipeline and carries up to 1.2 million barrels a day of Central Asian oil from Azerbaijan and through Georgia.
"I trust that the U.S. private sector will seize these opportunities," Gul said, referring to the energy industry.