Eurozone Debt Crisis and its Effects on Turkish Economy

The Eurozone debt crisis is an ongoing financial crisis that has made it difficult or impossible for some countries in the euro area to rollover their government debt without the help of third parties. The reasons for the Eurozone debt crisis can be summarized in three groups: (i) Errors on the structure of the Monetary Union, (ii) Macroeconomic instabilities among the monetary union, (iii) Problems on the financial system. In this paper, after discussing the origins of the crisis, we summarize the measures taken against the crisis and then describe the current stage of the crisis. Finally, we focus on the effects of the crisis on the Turkish economy. Turkey is affected by the crisis via three channels: trade, finance and expectations channel. We focus especially on the trade and finance channel for the scope of this paper. We show that these effects have remained rather limited for Turkey with the help of the strong macroeconomic and financial structure.