Economical overview
Turkey has undergone rapid economic
development since the 1990s. Intensive construction
activities have given new parts of the country a new
profile. Cities are linked by new roads and the general
standard of living has increased. But since 2016, a dark
cloud has settled over the country. Political unrest
with a government that is perceived as increasingly
authoritarian has caused the public dissatisfaction to
increase and foreign investors to doubt new ventures.
During much of the 2000s, the economy has grown by
6-8 percent each year. The export industry has had great
success and Turkish companies in the construction and
construction industries in particular are active in the
Middle East, Central Asia, North Africa and the Balkans.
Turkey's rise as an economic superpower has given the
country a place in the G20, the association of the
world's 20 largest economies (19 countries plus the EU)
that regularly meets since 2008 to discuss the world
economy.
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Countryaah.com:
Major imports by Turkey, covering a full list of top products imported by the country and trade value for each product category.
In 2010 and 2011, the economy grew almost as fast as
in China and India. The development went so fast that
skeptics began to warn of a bubble that could burst at
any time. The upturn coincided roughly with the
Islamic-based party AKP's government holdings since
2002, but the economic reforms behind the upswing had
begun a few years earlier in cooperation with the
International Monetary Fund (IMF), when the crisis was
profound and drastic changes were necessary.
The banking sector was decontaminated and the central
bank gained the same independent position as in most
western countries, with inflation control via interest
rate policy as a main task. The exchange rate was
allowed to float, that is, adapted to the market
situation, and major privatizations were implemented.
The reforms meant that government debt fell from almost
70 percent of gross domestic product (GDP) in 2002 to
below 33 percent in 2015. The central bank's new
interest rate policy pushed inflation from just over 53
per cent in 2001 to commute around 7–8 percent in 2016.
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Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including TUR which represents the country of Turkey.
However, economists have been worried by growing
pressure on the central bank from the country's
political leadership, which wants to create growth by
keeping interest rates low. President Erdoğan has argued
that an "interest lobby", which would be looking to harm
Turkey financially, prevents the government from
creating more jobs and giving people more in the wallet.
In 2018, when inflation rose again, the central bank was
expected to raise interest rates, but the decisions that
came were not so clear. This created pressure on the
currency, which fell rapidly in value, and increased
concern for a banking crisis. The rate of inflation in
autumn 2018 was the highest in 15 years and the economy
even shrunk in the second half of 2018. (Minus figures
two quarters in a row is the technical definition of
recession.) The Turkish currency lost almost 30 percent
of its value against the dollar in 2018. In the summer
of 2019, the president's patience ended. The governor
was replaced and soon the key rate was lowered in
several steps, from 24 percent interest rate in June
2019 to 9.75 percent in March 2020. The threat of
lasting recession caused by the global spread was due to
the president's reason for wanting to keep the interest
rate low. of coronavirus.
In September 2019 it was noted that inflation had
dropped, it was down and turned below 10 percent for the
first time in three years, but by the beginning of 2020
it was back at 12.5 percent. (The central bank's goal is
for inflation to remain at 8 percent by 2020.) Food
prices had risen, as were prices for a number of other
goods and services. And the growth in the economy was
just nice and steady at the plus.
There is a parallel between how the political
landscape has changed during the AKP's time in power and
the economic upswing. In both cases, the emphasis has
shifted from an established community elite in Istanbul
and Ankara, with anchoring in the secular state
apparatus and the military, to a religious
entrepreneurial class around Anatolia.
Many companies' religiosity in 2016 pulled parts of
the business community into the bitter power struggle
that had erupted between the ruling party AKP and the
Gülen movement (see Modern history and Current
politics). In the large purges of, above all, public
employees, which happened after a coup attempt, company
executives were also arrested.
Traditionally, the Turkish economy has been a mix of
modern industry and trade, along with a partially
outdated agriculture. In recent years, the private
manufacturing industry with textiles, vehicles and
electronic goods has developed into the most dynamic
sector.
The income gaps are large and continue to grow. There
are also significant differences in the level of
development between different parts of the country,
where, however, a number of medium-sized cities have
cracked down on Istanbul, Ankaras and Izmir's
headquarters.
The economy has been heavily state-controlled but
gradually privatized during the market reforms of the
past two decades. However, since the mid-2010s, there
has been a tendency for the state to take control of
private companies accused of participating in a
conspiracy against the government for power-political
reasons.
Large family-owned conglomerates have since played an
important role. From previously owning mainly
industries, the conglomerates have also included banks,
newspapers and TV companies. Companies have often
donated large sums to leading political parties in
return for government contracts. This has been
particularly evident during the AKP's time in power,
when the government in this way gained influence over
the mass media.
The informal sector includes the production of goods
and services that are not registered with the
authorities. Although the sector has declined in the
2000s, it still gives millions of people their
livelihoods. In 2013, 36 percent of all employees were
estimated to be unregistered. The large informal sector
means, among other things, that the state loses tax
money.
As the economic wheels spin faster and more people
are tempted to raise their standard of living, private
loans have also increased. The problems with "bad
loans", ie borrowers unable to cope with interest rates
and repayments, have increased, as has the number of
bankruptcies, which put the banks under pressure. This
has helped to slow down the economy and erode confidence
in the government. Some analysts fear that Turkey is in
the midst of a loan carousel where the country lives on
its assets and may end up in the same difficult
situation as some southern European countries in the EU.
Among Turkey's disadvantages in a crisis is that the
country lacks raw materials that can provide export
earnings that can lift the economy. Nor does the country
have high-tech production that can compete with advanced
industrialized countries. Relatively low educational
level is also an obstacle to strong technological
development. And although the proportion of women in
politics has increased, the position of women in the
labor market has deteriorated during the 2000s. A 2016
study found that about two-thirds of women lacked
employment. This was due not only to the lack of
available work, but also to pressure from the family to
stay home, low education and the feeling of unsafe
working conditions.
One problem is also a constant current account
deficit, simply because consumption is much higher than
own production. To remedy this, the industry needs to
find new export products, replace imported goods with
its own production and reduce the growing need for
imported energy. Controversial nuclear power plans are
part of these efforts.
Infrastructure and tourism
The only outlet of the Black Sea, the Bosphorus and
the Dardanelles with the intermediate Lake Marmara, is
one of the world's busiest shipping routes. According to
the Montreux Convention of 1936, Turkey must allow
merchant vessels from all countries to pass through
peacetime, even without pilotage. The sound is difficult
to navigate, and collisions and ground bumps occur.
There are concrete plans to establish a channel for
shipping traffic between Lake Marmara and the Black Sea
to relieve the Bosphorus. There, Turkey could also
charge for passing ships.
Several bridges and tunnels now connect Europe and
Asia in the district of Istanbul. For several of the
projects, Turkey has employed engineering companies from
Japan, where, as in Turkey, it is necessary to include
the risk of earthquakes in the calculations.
A fast train line between Istanbul and Ankara was
inaugurated in 2014. In 2013, a Turkish consortium was
commissioned to build a third major airport outside
Istanbul for EUR 22.1 billion. The first terminal was
inaugurated in 2018, but the work is expected to take
many years. Traffic is gradually being transferred to
the new airport. The construction work has been lined
with accidents and strikes, which is presumed to be due
to pressure on construction time.
Turkey started investing in tourism during the 1980s.
Tourism revenues (as well as transfers from Turks with
income in other countries) have been important to offset
the fact that imports of goods have increased faster
than exports. In 2018, the target was 40 million
visitors from abroad and it was met, even with visits by
foreigners counted. But the industry is sensitive to
political unrest. A number of terrorist acts in 2015 and
2016 were targeted at tourist areas in Istanbul. Between
autumn 2015 and summer 2016, Turkey was boycotted by
Russian tour operators after a Russian fighter jet was
shot down across the border to Syria, which may have
cost Turkey billions in lost revenue. Turkey's military
intervention in northern Syria in the fall of 2019 has
also worried travelers.
Foreign trade
Since 1996 there has been a customs union with the EU,
which means free trade in most goods. Trade in
agricultural products, for example, is governed by
separate agreements between Turkey and individual
countries. Trade with the Arab world has increased since
the Islamic Conservative AKP government came to power in
2002, but it is still insignificant compared to trade
with the EU. Turkey is also investing heavily in new
trade contacts in Africa, Asia and Latin America. China
is now one of the country's most important trading
partners.
Important export goods are clothing and textiles,
electrical equipment and electronics (including TV
sets), vehicles, agricultural products (fruits,
vegetables, wine), minerals including iron and steel.
Almost half the exports go to the EU. Imports are
dominated by machinery, fuels, iron and steel, plastics,
vehicles (primarily passenger cars) and electrical and
electronic equipment. 38 percent of the imports came
from the EU in 2018, but the single most important
importing country was Russia, where Turkey bought most
of its natural gas.
More recently, political tensions have increased with
Turkey led by Recep Tayyip Erdoğan and the United States
by Donald Trump, and economic expressions have emerged
despite both countries being part of the NATO military
alliance. Trump's decision to impose tariffs on Turkish
steel, as well as imports from many other countries, is
increasing pressure on the Turkish economy. Turkey also
loses the duty of duty of exporting certain goods to the
United States which it has benefited from as a
developing country.
Figures on Turkey's foreign trade have not been
entirely reliable, due to "informal" exports and
imports, including smuggling.
FACTS - FINANCE
GDP per person
US $ 9,311 (2018)
Total GDP
US $ 766 509 M (2018)
GDP growth
2.6 percent (2018)
Agriculture's share of GDP
5.8 percent (2018)
Manufacturing industry's share of GDP
19.1 percent (2018)
The service sector's share of GDP
54.3 percent (2018)
Inflation
15.7 percent (2019)
Government debt's share of GDP
30.2 percent (2018)
External debt
US $ 454,725 M (2017)
Currency
lira
Merchandise exports
US $ 174 599 M (2018)
Imports
US $ 216 412 M (2018)
Current account
- US $ 27,252 million (2018)
Commodity trade's share of GDP
51 percent (2018)
Main export goods
clothing, food, textiles, metal products, transport
equipment
Largest trading partner
Germany, Russia, China, USA, UK, Italy, France, Iraq
2007
October
A referendum approves the direct election of the president
In a referendum, the government's proposal endorses the president to be
elected in general elections, not as so far elected by Parliament. The term of
office shall be shortened from seven to five years, with the possibility of
re-election.
August
AKP's candidate becomes president
Foreign Minister Abdullah Gül is elected president since parliament and the
Constitutional Court stopped his candidacy in the spring.
January
Murder of journalist arouses appearance
Journalist Hrant Dink is murdered. He is the editor of the Armenian- and
Turkish-speaking weekly newspaper Agos and a spokesman for the small Armenian
minority in Turkey. The murder provokes great outrage in the country and
internationally.
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