| Date - Field | Turkey - Economy - overview |
2008 January
Economy - overview | Turkey's dynamic economy is a complex mix of modern industry and commerce along with a traditional agriculture sector that still accounts for more than 35% of employment. It has a strong and rapidly growing private sector, yet the state still plays a major role in basic industry, banking, transport, and communication. The largest industrial sector is textiles and clothing, which accounts for one-third of industrial employment; it faces stiff competition in international markets with the end of the global quota system. However, other sectors, notably the automotive and electronics industries, are rising in importance within Turkey's export mix. Real GNP growth has exceeded 6% in many years, but this strong expansion has been interrupted by sharp declines in output in 1994, 1999, and 2001. The economy is turning around with the implementation of economic reforms, and 2004 GDP growth reached 9%, followed by roughly 5% annual growth from 2005-07. Inflation fell to 7.7% in 2005 - a 30-year low but climbed back to 8.5% in 2007. Despite the strong economic gains from 2002-07, which were largely due to renewed investor interest in emerging markets, IMF backing, and tighter fiscal policy, the economy is still burdened by a high current account deficit and high external debt. Further economic and judicial reforms and prospective EU membership are expected to boost foreign direct investment. The stock value of FDI currently stands at about $85 billion. Privatization sales are currently approaching $21 billion. Oil began to flow through the Baku-Tblisi-Ceyhan pipeline in May 2006, marking a major milestone that will bring up to 1 million barrels per day from the Caspian to market. In 2007, Turkish financial markets weathered significant domestic political turmoil, including turbulence sparked by controversy over the selection of former Foreign Minister Abdullah GUL as Turkey's 11th president. Economic fundamentals are sound, marked by strong economic growth and foreign direct investment. Turkey's high current account deficit leaves the economy vulnerable to destabilizing shifts in investor confidence, however. |
2007 January
Economy - overview | Turkey's dynamic economy is a complex mix of modern industry and commerce along with a traditional agriculture sector that still accounts for more than 35% of employment. It has a strong and rapidly growing private sector, yet the state still plays a major role in basic industry, banking, transport, and communication. The largest industrial sector is textiles and clothing, which accounts for one-third of industrial employment; it faces stiff competition in international markets with the end of the global quota system. However, other sectors, notably the automotive and electronics industries, are rising in importance within Turkey's export mix. Real GNP growth has exceeded 6% in many years, but this strong expansion has been interrupted by sharp declines in output in 1994, 1999, and 2001. The economy is turning around with the implementation of economic reforms, and 2004 GDP growth reached 9%, followed by roughly 5% annual growth in 2005-06. Inflation fell to 7.7% in 2005 - a 30-year low, but climbed back to 9.8% in 2006. Despite the strong economic gains in 2002-06, which were largely due to renewed investor interest in emerging markets, IMF backing, and tighter fiscal policy, the economy is still burdened by a high current account deficit and high debt. The public sector fiscal deficit exceeds 6% of GDP - due in large part to high interest payments, which accounted for about 37% of central government spending in 2004. Prior to 2005, foreign direct investment (FDI) in Turkey averaged less than $1 billion annually, but further economic and judicial reforms and prospective EU membership are expected to boost FDI. Privatization sales are currently approaching $21 billion. Oil began to flow through the Baku-Tblisi-Ceyhan pipeline in May 2006, marking a major milestone that will bring up to 1 billion barrels per day from the Caspian to market. |
2006 January
Economy - overview | Turkey's dynamic economy is a complex mix of modern industry and commerce along with a traditional agriculture sector that in 2004 still accounted for more than 35% of employment. It has a strong and rapidly growing private sector, yet the state still plays a major role in basic industry, banking, transport, and communication. The largest industrial sector is textiles and clothing, which accounts for one-third of industrial employment; it faces stiff competition in international markets with the end of the global quota system. However, other sectors, notably the automotive and electronics industries, are rising in importance within Turkey's export mix. In recent years the economic situation has been marked by erratic economic growth and serious imbalances. Real GNP growth has exceeded 6% in many years, but this strong expansion has been interrupted by sharp declines in output in 1994, 1999, and 2001. Inflation, in recent years in the high double-digit range, fell to 9.3% by 2004 - a 30-year low. Despite these strong economic gains in 2002-04, which were largely due to renewed investor interest in emerging markets, IMF backing, and tighter fiscal policy, the economy is still plagued with high debt and deficits. The public sector fiscal deficit exceeds 6% of GDP - due in large part to the huge burden of interest payments, which accounted for more than 40% of central government spending in 2004, and to populist spending. Foreign direct investment (FDI) in Turkey remains low - averaging less than $1 billion annually, but further economic and judicial reforms and prospective EU membership are expected to boost FDI. A major political and economic issue over the next decade is whether or not Turkey will become a member of the EU. |
2005 January
Economy - overview | Turkey's dynamic economy is a complex mix of modern industry and commerce along with a traditional agriculture sector that in 2004 still accounted for more than 35% of employment. It has a strong and rapidly growing private sector, yet the state still plays a major role in basic industry, banking, transport, and communication. The largest industrial sector is textiles and clothing, which accounts for one-third of industrial employment; it faces stiff competition in international markets with the end of the global quota system. However, other sectors, notably the automotive and electronics industries, are rising in importance within Turkey's export mix. In recent years the economic situation has been marked by erratic economic growth and serious imbalances. Real GNP growth has exceeded 6% in many years, but this strong expansion has been interrupted by sharp declines in output in 1994, 1999, and 2001. Inflation, in recent years in the high double-digit range, fell to 9.3% by 2004 - a 30-year low. Despite these strong economic gains in 2002-04, which were largely due to renewed investor interest in emerging markets, IMF backing, and tighter fiscal policy, the economy is still plagued with high debt and deficits. The public sector fiscal deficit exceeds 6% of GDP - due in large part to the huge burden of interest payments, which accounted for more than 40% of central government spending in 2004, and to populist spending. Foreign direct investment (FDI) in Turkey remains low - averaging less than $1 billion annually, but further economic and judicial reforms and prospective EU membership are expected to boost FDI. A major political and economic issue over the next decade is whether or not Turkey will become a member of the EU. |
2004 January
Economy - overview | Turkey's dynamic economy is a complex mix of modern industry and commerce along with a traditional agriculture sector that in 2001 still accounted for 40% of employment. It has a strong and rapidly growing private sector, yet the state still plays a major role in basic industry, banking, transport, and communication. The most important industry - and largest exporter - is textiles and clothing, which is almost entirely in private hands. In recent years the economic situation has been marked by erratic economic growth and serious imbalances. Real GNP growth has exceeded 6% in many years, but this strong expansion has been interrupted by sharp declines in output in 1994, 1999, and 2001. Meanwhile, the public sector fiscal deficit has regularly exceeded 10% of GDP - due in large part to the huge burden of interest payments, which accounted for more than 40% of central government spending in 2003. Inflation, in recent years in the high double-digit range, fell to 18.4% in 2003. Perhaps because of these problems, foreign direct investment in Turkey remains low - less than $1 billion annually. In late 2000 and early 2001 a growing trade deficit and serious weaknesses in the banking sector plunged the economy into crisis - forcing Turkey to float the lira and pushing the country into recession. Results in 2002-03 were much better, because of strong financial support from the IMF and tighter fiscal policy. Healthy growth is likely to continue through at least the first half of 2004. |
2003 January
Economy - overview | Turkey's dynamic economy is a complex mix of modern industry and commerce along with a traditional agriculture sector that in 2001 still accounted for 40% of employment. It has a strong and rapidly growing private sector, yet the state still plays a major role in basic industry, banking, transport, and communication. The most important industry - and largest exporter - is textiles and clothing, which is almost entirely in private hands. In recent years the economic situation has been marked by erratic economic growth and serious imbalances. Real GNP growth has exceeded 6% in many years, but this strong expansion has been interrupted by sharp declines in output in 1994, 1999, and 2001. Meanwhile, the public sector fiscal deficit has regularly exceeded 10% of GDP - due in large part to the huge burden of interest payments, which account for more than 50% of central government spending; inflation has remained in the high double-digit range. Perhaps because of these problems, foreign direct investment in Turkey remains low - less than $1 billion annually. In late 2000 and early 2001 a growing trade deficit and serious weaknesses in the banking sector plunged the economy into crisis - forcing Turkey to float the lira and pushing the country into recession. Results in 2002 were much better, because of strong financial support from the IMF and tighter fiscal policy. Continued slow global growth and serious political tensions in the Middle East cast a shadow over prospects for 2003. |
2002 January
Economy - overview | Turkey's dynamic economy is a complex mix of modern industry and commerce along with a traditional agriculture sector that in 2001 still accounted for 40% of employment. It has a strong and rapidly growing private sector, yet the state still plays a major role in basic industry, banking, transport, and communication. The most important industry - and largest exporter - is textiles and clothing, which is almost entirely in private hands. In recent years the economic situation has been marked by erratic economic growth and serious imbalances. Real GNP growth has exceeded 6% in most years, but this strong expansion was interrupted by sharp declines in output in 1994, 1999, and 2001. Meanwhile the public sector fiscal deficit has regularly exceeded 10% of GDP - due in large part to the huge burden of interest payments, which in 2001 accounted for more than 50% of central government spending - while inflation has remained in the high double digit range. Perhaps because of these problems, foreign direct investment in Turkey remains low - less than $1 billion annually. In late 2000 and early 2001 a growing trade deficit and serious weaknesses in the banking sector plunged the economy into crisis - forcing Ankara to float the lira and pushing the country into recession. Prospects for 2002 are much better, because of strong financial support from the IMF, tighter fiscal policy, a major bank restructuring program, and the enactment of numerous other economic reforms. |
2001 January
Economy - overview | Turkey's dynamic economy is a complex mix of modern industry and commerce along with traditional agriculture that still accounts for nearly 40% of employment. It has a strong and rapidly growing private sector, yet the state still plays a major role in basic industry, banking, transport, and communication. The most important industry - and largest exporter - is textiles and clothing, which is almost entirely in private hands. In recent years the economic situation has been marked by erratic economic growth and serious imbalances. Real GNP growth has exceeded 6% in most years, but this strong expansion was interrupted by sharp declines in output in 1994 and 1999. Meanwhile the public sector fiscal deficit has regularly exceeded 10% of GDP - due in large part to the huge burden of interest payments, which now account for more than 40% of central government spending - while inflation has remained in the high double digit range. Perhaps because of these problems, foreign direct investment in Turkey remains low - less than $1 billion annually. Prospects for the future are improving, however, because the ECEVIT government since June 1999 has been implementing an IMF-backed reform program, including a tighter budget, social security reform, banking reorganization, and accelerated privatization. As a result, the fiscal situation is greatly improved and inflation has dropped below 40% - the lowest rate since 1987. The country experienced a financial crisis in late 2000, including sharp drops in the stock market and foreign exchange reserves, but is recovering rapidly, thanks to additional IMF support and the government's commitment to a specific timetable of economic reforms. |
2000 January
Economy - overview | Turkey has a dynamic economy that is a complex mix of modern industry and commerce along with traditional village agriculture and crafts. It has a strong and rapidly growing private sector, yet the state still plays a major role in basic industry, banking, transport, and communication. Its most important industry - and largest exporter - is textiles and clothing, which is almost entirely in private hands. The economic situation in recent years has been marked by erratic economic growth and serious imbalances. After a sharp drop in 1994, real GNP averaged 6.5% annual growth in 1995-98; it then fell about 5% in 1999 as Turkey was adversely affected by Russia's economic crisis and two major earthquakes. The already-large public sector fiscal deficit widened in 1999 to perhaps 14% of GDP - due in large part to the huge burden of interest payments which accounted for 42% of central grovernment spending. Despite the implementation in January 1996 of a customs union with the EU, foreign direct investment in the country remains low - less than $1 billion annually - perhaps because potential investors are concerned about economic and political stability. Prospects for the future are brighter - including prospects for foreign investment - because the ECEVIT government is implementing a major economic reform program, including a tighter budget, social security reform, banking reorganization, and greatly accelerated privatization. |
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This page was last updated on 1 October, 2008 |
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