Economic Outlook of Turkey
Economic growth
Turkey has undergone a profound economic transformation since 2001. It has recorded a remarkable
GDP growth rate of almost % 6 in average during the period of 2002-2011. Thus, per capita income increased up to 10,500 USD in 2011, from the modest figure of 3,500 thousand dollars recorded in 2002.
Due to the global crisis, majority of the emerging markets suffered a significant slowdown in economic activity. Being an open and free-market economy, integrated with the global economic and financial system, Turkey was no exception.
Turkey was also adversely affected by the declining external demand and falling international capital flows.
Overall growth rates in 2008 and 2009 materialized well below the remarkable performance that was achieved between 2002 and 2007. However, Turkish economy bounced back and has achieved a growth rate of % 9.2 and % 8.5 in the years 2010 and 2011 respectively.
Today, Turkey is the 17th largest economy in the world with a GDP of about 800 billion dollars in 2012.
Monetary Policy
Monetary policies of the Turkish Central Bank played a crucial role in securing macroeconomic balances, and most importantly reining in inflation over the last decade. Having been one of the major concerns of the Government for more than 3 decades, inflation has finally been brought down to single digits by mid-2000s.
CPI inflation was % 6.16 last year. It is forecasted to settle down around % 5 in 2014.
Fiscal Discipline
Turkey has been extremely careful with its budget for the last decade. Once peaked at almost % 17 in 2001,
EU-defined general government budget deficit/GDP ratio was % 2.6 in 2011 and Turkey met the Maastricht criteria of % 3 while outperforming 18 EU Countries (Central government budget deficit/GDP ratio was % 1.3 in Turkey in 2011 and Turkey outperformed 23 EU Countries).
While
net public debt to GDP ratio was % 90.5 in 2001,
it decreased to % 39.4 in 2011, which was below the level in 21 EU Countries and the Maastricht Criterion of % 60. The composition of the debt stock has also been improved and become more resilient to fluctuations in interest and exchange rates as well as capital flows.
Reserves
Turkeys international reserves have continued to increase throughout the last decade.
The Central Bank international reserves reached 100,3 billion dollars by the end of 2012. FDI inflows and portfolio transfers are the main driving force behind considerable expansion in reserves.
Foreign Trade
Turkey has been pursuing an export-led growth since 1980. By virtue of economic reforms, restrictions on imports have been lifted, safeguard practices were reduced, and foreign exchange transactions were liberalized.
As a result of the economic reforms carried out during the last decade, both the volume and composition of the Turkish trade have radically changed. The volume of Turkish exports increased to 152,6 billion USD in 2012 from 36 billion USD in 2002.
The total trade volume accounted for 389.1 billion USD in 2012. Exports increased by % 13.9 on an annual basis up to 152,6 billion USD. Imports shrank by % 1.6 decreasing to 236.5 billion USD.
Foreign Direct Investment
Turkeys successful economic performance, young population, qualified and competitive labour force, liberal and reformist investment climate, highly developed infrastructure, advantageous geographic position, low tax rates and incentives and large domestic market, as well as customs union with the EU since 1996 provide ample opportunities for foreign investors.
As of 31 December 2012, the number of foreign firms active in Turkey is 32,146. 881 foreign firms have liaison offices in Turkey.
The total amount of foreign direct investments exceeded 130 billion USD by the end of 2012.
Privatization
Privatization has been among the top priorities of the Governments agenda. Turkey has been listed among the top OECD countries that receive the most out of privatization. Privatization revenues reached 8 billion Dollars in the period of 1986-2003 and 36.2 billion Dollars between 2003-2012, reaching 44 billion Dollars.
The main philosophy of privatization is to confine the role of the state in areas such as health, basic education, social security, national defense, and large scale infrastructure investments. This is in line with Turkeys target of creating a truly competitive market economy driven by the private sector.
Turkish Business Abroad
Turkish businessmen have been increasingly active in neighboring countries as well as other regional countries. This is most visible in construction business.
Turkish contractors have successfully completed 7000 projects in 100 countries across the globe by the end of 2012. Total turnover of the Turkish construction and engineering sector has reached 242 billion USD. 33 Turkish firms were listed among the top 225 international contractors in 2012 coming second after Chinese companies.
Tourism
Turkey, with its natural beauties, unique historical and archaeological sites, ever-developing hotel and touristic infrastructure and a tradition of hospitality has so much to offer to its visitors.
Turkey has recently become one of the world's most popular tourism destinations. In 2012 31.8 million foreign visitors entered Turkey and tourism revenues exceeded 23.4 billion USD.
Economic Outlook of Turkey / Rep. of Turkey Ministry of Foreign Affairs
