While Turkey is planning to continue its golden age in economy, it has started going under the influence of a different climate starting from the mid 2013. In fact this climate that has been entered is not only specific to Turkey. The decleration of Fed's decision in the mid 2013 has surrounded the world with the same climate. Turkey had to face revision of its 4% growth target by the beginning of 2014. While the world economy has been pretty stagnant last year, Turkey has performed a rather better outlook. Surely this comment is made disregarding the current account deficit which is Turkey’s knightmare as, in 2013, this deficit has reached USD 65 billion that is the highest rate of its history after 2011. Current account deficit always casts a shadow over Turkey’s economy, however, the point we have reached is a very importatant economic success for Turkey. When we look at the era of 2000s, we all remember that the Turkish economy was about to be diminished from the face of the world. A USD 124 billion GDP in the year 2002 has increased to USD 786.3 billion in 2012 with the current prices. Having performed an enormous growth, Turkey has put its name again in the world economy league. However, as the monetary expansion in the USA is moving towards an end and also with Turkey having entered an atmosphere of elections, the expected possibility of narrowing in the investments is enough for our economy to be mentioned with fragility inspite of the pleasing exports. Prof. Dr. Murat Birdal from Istanbul University makes a similar comment: “In 2014, as it was during the previous year, the wold’s attention will be on the cuts and interest policies that Fed will substantiate on the asset purchase program. We have obviously come to an end of the cheap dollar entry related growth period that the developing markets have been enjoying for a long time. In the new period, Turkey stands out as one of the fragile economies that will be most effected negatively from this change due to its external debt stock and the current account deficit rate”. Associate Prof. Dr. Nuray Terzi from the Marmara University says that the developing economies, although giving signals of stability, are still keeping their fragility. WINDS OF ELECTIONS IN TURKEY Turkey is moving towards a very intense agenda with the municipality elections, the presidency elections right after and the general elections. Together with this agenda, Turkey will also have work on keeping the stability of the economy. However, even the deviations on the interest rates data show that Turkey will have a very hard time and that it will have to put in a better performance than the previous years’ success. The Central Bank just can not reach its recent target of 5% interest rate and the circle of economists are already predicting that the interest rate of 2014 will actualize over 5%. Evaluating the inflation front, PWC’s Financial Services Research and Analysis Manager Basar Yildirim aggrees that the inflation rate will be exceeding TCMB (Turkish Central Bank)’s target: “Inflation will most probably continue to be exposed to continuous currency transitivity, cost pressure and the upward pressure of the increase in the electricity/natural gas prices and the TCMB will complete the year above its predictions”. While the depreciation of the Turkish Lira increases the expectations in the interst rates, the perception that it will also have a rather positive impact on the exports is unfortunately far from a realistic approach. During this period where even the internal investment have focused on the elections, the external investors have also entered into a similar standby process. The exports have increased approximately 4.5 times from 2002 to 2012, however, the economists are stating that such a success should not be expected in 2014. Just like in the developing countries, exports is the driving force behind growth in Turkey but it will not be sufficient for growth due to the aspects underlined by Yildirim and it seems that that growth will tend to follow a downward movement: “As the Fed progressively decreased its monetary expansion program, increase in the political risk perception resulted in depreciation of Turkish currency just like in the other developing countries. In addition to unprocessed food prices, petrol prices and tax increases, in order to reduce the pressure of depreciation observed in Turkish Lira over inflation rates, as the Central Bank (TCMB) rigorously increases the interest rates, BDDK’s (Banking Regulation and Supervision Agency) financial stability increasing procedures (credit card deferred payment restrictions and loans) will have a downward impact on economic growth via consumption this year”. THE WATERS SEEM TO BE SETTLING IN THE GLOBAL ARENA International Monetary Fund (IMF) increased its growth prediction for the year 2014 from 3% to 3.7% and it prediction for the year 2015 to 3.9%. On the other hand according to IMF, in 2014 the developing economies will grow by 5.1 percent while the advanced economies will grow by 2.2percent. Ass. Prof. Dr. Nuray Terzi draws attention to the fact that the increase of the mutual dependence in the global engagements makes economies more fragile referring to the report of IMF and says that it contrains the policy makers’ shifting lines in the country. Inspite of this, she interprets the IMF’s update of the global growth prediction in ist World Economic Outlook Report as a positive impact on the growth of world economies. Terzi adds, “The developing economies will continue to be the driving forces of growth. However, they will continue tos tay behind their previous growth rates”. As a result, even though the world economy has moved forward to a more positive path by the end of 2013, Fed’s decision to slow down the monetary expansion in the beginning of summer 2013 has created an anxiety environment fort he developing countries. However, as many countries have adopted fixed currency rate policy and have taken on short term foreign currency debts in the 1990s, they have gone through crucial crisis. With the USA’s monetary expansion decision later on, there has been considerable amounts of monetary input into these countries and they have recorded high growth. Although now it appears as if the situation has reversed, the general opinion is that the crisis of the 1990s will not be faced again. Because all the countries including Turkey have drawn important lessons and have positioned their systems more strongly. Therefore, instead of moving forward with the assumption that all the developing countries will face crisis, the foresight that these countries will be decomposed and will somehow contiue to grow would be a beter evaluation. What is expected of Turkey is also to be among the countries that are decomposed in the positive direction. Başar Yıldırım PwC Financial Services Research and Analysis Manager The potential recovery in the European economies is a positive developmen for Turkey with the depreciation in Turkish Lira and more 41% of its exports being to the Europen Region. The two elections that will take place in the country in 2014 will support growth especially with the public spendings especially during the first half of the year. When we consider that these spendings have over 70% share in the GD P, with the above mentioned developments, we can say that the growth rate of 2014 will stay below that of 2013. However, when considered long term, it makes sense to emphasize that Turkish economy contiues to keep strong potentials that will increase the investors urge. Ass. Prof. Dr. NURAY TERZI Marmara University The USA’s prediction of growth rate compared to the previous year has created a positive atmosphere in the othe economies. However, the change in the USA’s monetary policy carries a quality of warning for the other countries to recover themselves. Therefore, this year will be a time when the countries will straighten up their economies and will be more cauitous in their decisions. It is possible that the US economy may face some risks as well. For example, the increase in the interest rates might influence the property markets or they may face nagative impacts of the currency rate changes in the developing countries. The Euro Zone data seems far from still being a herald of strong and sustainable growth. Also, deflationary expectations are becoming more common. Prof . Dr. Murat Bİrdal Istanbul University Starting the second half of 2013, the instability of the currency exchange rates that have performed a sharp upward movement will continue to be in the front lines of the economiy's agenda in the coming months. The high private sector external debt stock intensifies the negative impacts of the sharp currency exchange rate movements over the companies’ net results. On the inflation frontage,although the policies of the Central Bank and the Banking Regulation and Supervision Agency towards limiting the loan expansion, because of the rise in the exchange rates, the increase in the costs carries the prices upwards. Aside from the Fed decisions, the size of the political chaos taking place in the rurroung countries such as Ukraine and Syria will be determining over the Exchange rate movements and the interest rates.