An Analysis of Economic Deficits in Turkiye

Abstract

In contemporary global economies, identifying early warning indicators of financial crises and formulating appropriate macroeconomic policy responses are crucial for ensuring sustainable economic stability. Most crises originate in Western core economies and subsequently spread to developing countries, largely driven by structural imbalances known as “economic deficits.” In this context, the concepts of the “twin deficit” (budget and current account deficits), “triple deficit” (including the savings gap), and “quadruple deficit” (adding the output gap) have become central to modern macroeconomic debates.

The Turkish economy exemplifies the structural fragilities described in Ragnar Nurkse’s vicious circle of poverty framework, experiencing cyclical crises approximately every 7–8 years due to persistent macroeconomic imbalances. Chronic issues such as insufficient capital accumulation, low productivity, inadequate savings, and dependence on external financing have collectively constrained economic growth. Among these, the current account deficit remains the most critical driver of financial vulnerability.

According to the Quadruple Deficit Hypothesis, the interconnection between budget, savings, current account, and output gaps amplifies economic instability. The persistent productivity deficit and inefficient production structure in Turkey have widened the output gap, thereby suppressing long-term growth potential. Consequently, economic expansion and crisis are inversely related phenomena—when growth strengthens, crisis signals diminish, and vice versa. Sustainable growth, therefore, requires productivity-centered strategies, efficient resource allocation, and coordinated macroeconomic management capable of breaking this cyclical pattern.