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Turkey - Overview

Contents extracted from the comprehensive atlas of international trade by Export Entreprises

Introduction

Capital:: Ankara
Area:: 784 km2
Total Population:: 73.997
Annual growth rate:: 1.00%
Density:: 96.00/km2
Urban population:: 72%
Population of Istanbul (12.600), Ankara (4.000), Izmir (3.200), Bursa (3.190), Gaziantep (1.912), Adana (1.556)
Official language: Turkish.
Other languages spoken: There are several other Altaic languages as well as minorities speaking Kurdish, Greek, Armenian, Bulgarian, Albanian or Circassian. English, French or German are languages used fairly frequently in trade.
Business language: English is very commonly used in business.
Ethnic Origins:: There are more than 70 Thethnic groups in Turkey. 75% Turks, 20% Kurds, 3-4% Circassians, and also Armenians, Greeks, Georgians, Arabs, Europeans of ethnic origins and the Balkans, Russians...(1-2%).
Beliefs: Muslims 96%. Others: Jews, Orthodox, Catholics and Protestants.
Telephone codes:
To make a call from: 0
To make a call to: +90
Internet suffix:: .tr
Type of State::
Turkey is a republic based on a parliamentary democracy.
Turkey is a "quasi-democratic" State in full transition. The army plays an important role, however informal, in the political life of the country.
Type of economy::
Upper-middle-income economy, OECD member, Emerging Financial Market
Economy heavily dependent on agriculture and tourism; importance of mining: 60% of world reserves of boron

Economic overview

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. Despite the slowdown due to the unfavorable international environment, the economy again performed well in 2012, as opposed to the country's European neighbors. Growth slowed down in 2013, reaching only 2.2% due to the slowing down of the global economy, the crisis in the EU  -- the main trading partner of Turkey -- geopolitical tensions and the sharp rise in oil prices. A stronger growth is expected in 2014 (4%), driven by foreign trade, consumption and credit.

Despite its enviable position, characterized by a low level of debt and a low budget deficit (1.9% of GDP), the Turkish economy is showing signs of vulnerability. Growth has slowed and inflation has reached 7.7%, due to the depreciation of the pound (a 13% fall compared to the euro), economic overheating and rising oil prices. The current account deficit is growing (7.4% of GDP). The country's dependence on capital inflows makes the economy highly 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. Household debt and the trade deficit are also issues of concern. The 2014 budget, with a deficit of USD 15.2 billion, aims to decrease the current account deficit through increased savings, redirection of existing resources towards productive areas, maintaining sound public finances, and stimulating growth and employment. The combined budget of defense, security and intelligence has been increased by 9.4% compared to 2012. The largest part of the 2014 budget is allocated to education spending (budget increased by 15%), followed by healthcare. Among the challenges facing the government are the Syrian political crisis which blocks the expansion of foreign trade to the Middle East, the crisis in the eurozone to which the Turkish economy is closely linked, and the country's energy dependence.

The unemployment rate, which soared due to the economic crisis of 2008/2009, has now declined (under 10%), however unemployment exceeds 18% among the young. Turkey is characterized by the existence of a large informal sector and income inequality remains strong.

Main industries

Agriculture in Turkey, which contributes nearly 10% of the GDP and employs nearly a quarter of the population, still suffers from low productivity because of its management system (small farms). 11% of the country's territory is cultivated. Wheat is the main crop. The country is the third biggest exporter of tobacco in the world and 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 26% of the workforce, with 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 at least two-thirds to the GDP. Tourism represents 4% of the GDP with about 31 million tourists a year and almost 22 milion in profits, thus making it one of the key sources of foreign currency for the country. Turkey is one of the ten most visited countries in the world.

Foreign trade overview

Turkey's economy is open to foreign trade, which represents nearly 55% of GDP (average 2008-2010).

The spearheads of Turkish foreign trade are the automobile and textile industries. Next in order are the agricultural and food products 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. The country has suffered from the crisis in the euro zone, which is the destination for a third of its exports, as well as from the unstable political situation in the Middle East. In 2013, the Turkish deficit increased by 18.7% compared to 2012, reaching 99.78 billion USD, due to the exports of gold reaching export levels (an increase of 150%) in the course of the year (these were meant for Iran as a payment for oil and gas imports while avoiding the banking circuits).

FDI

According to the UNCTAD 2013 World Investment Report , Turkey is the largest recipient of FDI in West Asia, leaving behind Saudi Arabia. The country has adopted a series of legislative reforms to facilitate the reception of foreign investment (tax exemptions and other incentives), such as the creation of Investment Support and Promotion Agency of Turkey (ISPAT), a showcase effort undertaken to attract foreign operators. Political stability and economic performance which followed the 2001 crisis led to a surge in FDI inflows, until they dried up as an effect of the global financial crisis. FDI was been very dynamic in 2011, partially because of the development of public-private partnerships for major infrastructure projects and measures such as administrative streamlining, strengthening intellectual property rights, putting an end to FDI screening and carrying out structural reforms with a view to the country's future accession to the EU. However, FDI again slowed down in 2012 as a reaction to the euro zone crisis. In 2013, they increased to 10.1 billion USD, a decrease of 5.3% compared to 2012.
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