The global crisis initially inflicted a serious blow on the Turkish economy. Although the banking and financial sector proved quite robust, the real economy was significantly impacted. There was a sharp reduction in Turkish trade. A lack of global demand was the most important factor that adversely affected Turkey's exports. Those from the automotive and durable goods sectors were the most severly hit. External demand contracted rapidly, and the growth of the Turkish economy, which had been based on export-led production, was abruptly stalled. In the first quarter of 2009, the Turkish economy declined to −14.3 per cent, the sharpest quarterly decline of the past three decades, and to −7 per cent in the second quarter. On top of such sharp GDP contraction, unemployment increased steeply in the second half of 2008 and the country's economy recorded the highest unemployment levels, 16.1 per cent and 15.8 per cent in February and March 2009 respectively.

Turkey's high economic growth in the period after 2002 was mainly based on Turkish exports of manufactured goods, especially cars and electrical appliances (see Chapter 4). From 1996, when a customs union agreement became effective with the EU, more than 50 per cent of Turkish exports were destined for European Union member states. After the outbreak of the global crisis, and with the decline in EU demand, Turkey's exports decreased by 25 per cent in 2009 (Kalkan, Dündar & Dinççağ 2010: 1). As a response to this sharp fall in EU demand, Turkish companies and business associations increased their efforts to counterbalance the shrinking demand in the EU and marketed their products in other areas, mainly Africa and Middle East, and exports to both areas gradually increased significantly between 2008 and 2009.

Several measures introduced by the government to boost the financing of exports were quite effective. Between November 2008 and September 2009, just like many other central banks in the world, the Central Bank of Turkey cut its interest rates (11 times), and the borrowing rate was reduced from 16.75 per cent to 7.25 per cent (Uygur 2010: 29). Tax reductions were launched from mid-March to mid-June 2009 to encourage sales of motor vehicles, white goods and furniture.