Hotels hope tourism will be back to normal for the summer season

Unless the security situation escalates, most experts believe the economy will continue its recent growth and recovery.

They stress that Turkish exports are continuing to rise, and that attacks have not targeted the coastal tourism resorts.

Despite immediate economic jitters, the economy is still on track, they say.

Improving

[Terror attacks] leave a scar but it is not terribly deep Isaac Tabor, analyst, Merrill Lynch

Isaac Tabor, head of emerging markets strategy at investment bank Merrill Lynch, said past terrorist attacks around the world had always failed to derail economies.

"It is not pleasant to talk about, but with such acts in the past, the long term economic affect has always been very limited," he said.

"Yes they leave a scar, but it is not terribly deep.

"If you look at the recent performance of the Turkish economy, all the indicators are that things are improving for 2004, with outputs up and interest rates falling."

Mr Tabor added: "We are not going to be making any changes to our Turkey forecasts."

Lira lows

Debbie Orgill, emerging markets economist at Dutch bank ABN Amro, agreed, saying the economic impact of the bombings was unlikely to last long.

"There has been some near-term impact on the markets, and the Turkish lira is likely to revisit recent lows," she said.

Turkey's economy GDP: US$468bn GDP per capita: $7,000 Labour force: 23 million Unemployment: 10.8% Source: CIA World Factbook

"A lot depends upon the locals. It is a concern that they will rush to dollars.

"But my bottom line is that this will not happen in a big way," said Ms Orgill.

Some international companies might pull money out of Turkey, which could also have some impact, she said.

"But overall, inward investment in Turkey is very low."

Off-season

Ms Orgill points out that Turkey's key economic driver is its export market, and that this will continue to be driven by international demand.

"The country's economic reform process may slow down if fighting terrorism becomes the government's main concern, but Turkey has not been pushed into an economic crisis.

"It will inevitably now be taking a hard line against terrorism, and this can only strengthen its relationship with the US," she said.

Sarah Hewin of American Express Bank said the country's tourism sector would not immediately be affected, because it is now off-season.

"As long as the attacks do not continue, the 2004 summer season should be back to normal," she said.

"The current account deficit could be a concern, but exports have risen. Turkey just needs to keep its tourism trade," said Ms Hewin.

Events in Iraq have not helped Turkey but, before the terror attacks, its economy was continuing to recover.

And the government has recently got the green light for additional funds from the World Bank ($4.5bn), US Government ($8.5bn) and International Monetary Fund ($475m).