Economic trends
After going through a serious economic and political crisis in 2001, Turkey recovered dramatically thanks to a more favorable political climate but also because of monetary, fiscal and structural reforms instilled by the World Bank and IMF. With growth estimated at 7.5% in 2011, which was driven by strong consumption, Turkey was rapidly recovering from the global financial crisis of 2008/2009. However, due to the unfavorable international environment and declining capital flows, reflecting concerns about the country's current budget deficit, growth should slow down significantly in 2012 (2%).
Despite a low level of debt and budget deficit, the Turkish economy shows signs of vulnerability. The stability of the Turkish growth is threatened by the high level of inflation (8.3%), relatively high taxes and a deepening budget deficit. The country's dependence on capital flows makes the economy particularly vulnerable to external shocks. Monetary policy pursued by the government aims to counter the devaluation of the currency and restrict consumer credit and speculative investments.
The unemployment rate, which soared due to the economic crisis of 2008/2009, has now declined (11.5%). Turkey is characterized by the existence of a large informal sector and income inequality remains strong.
Main branches of industry
Agriculture in Turkey, which contributes nearly 10% of the GDP and employs practically a third of the population, still suffers from low productivity because of its management system (small farms). 10% of the country's territory is cultivated. Wheat is the main crop. The country is the third biggest exporter of tobacco in the world, the leading producer of hazelnuts (70% of world production). Mineral resources are abundant but under-exploited.
The manufacturing industry, the main industrial activity of the country, makes up nearly 30% of the GDP and commands almost 18% of the workforce, the textile and automobile sectors being the main activities. The Turkish government gives special priority to large infrastructure projects, particularly in the transport sector, which mostly function under the BOT model (build, operate, transfer).
The tertiary sector contributes slightly less than two-thirds to the GDP. Tourism represents 4% of the GDP with about 13 million tourists a year and almost 22 milions in profits, thus making it one of the key sources of foreign currency for the country. Turkey is one of the first ten most visited destinations in the world.
International trade
Turkey's economy is open to foreign trade, which represents nearly 50% of GDP (average 2008-2010).
The spearheads of Turkish foreign trade are the automobile and textile industries. Next in order are the agricultural and foodproducts industry, machinery, electronic equipment, steel, and chemicals. The European Union is by far its largest customer, followed by USA, China and Iraq. The country has a large trade deficit because of its strong energy dependence, particularly on Russia and the Middle East.
Due to its dependency on the imports of intermediate goods for production, Turkey has a growing trade deficit, despite a steady increase in exports, which have a relatively low added value.
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Last updates: May 2012
