Turkish Economy
Economy - overview: Turkey's largely free-market economy is increasingly driven by its industry and service sectors, although its traditional agriculture sector still accounts for about 25% of employment. An aggressive privatization program has reduced state involvement in basic industry, banking, transport, and communication, and an emerging cadre of middle-class entrepreneurs is adding dynamism to the economy and expanding production beyond the traditional textiles and clothing sectors. The automotive, construction, and electronics industries are rising in importance and have surpassed textiles within Turkey's export mix.
Oil began to flow through the Baku-Tbilisi-Ceyhan pipeline in May 2006, marking a major milestone that has brought up to 1 million barrels per day from the Caspian region to market. Several gas pipeline projects also are moving forward to help transport Caspian gas to Europe through Turkey, which over the long term will help address Turkey's dependence on imported oil and gas, which currently meets 97% of its energy needs.
After Turkey experienced a severe financial crisis in 2001, Ankara adopted financial and fiscal reforms as part of an IMF program. The reforms strengthened the country's economic fundamentals and ushered in an era of strong growth averaging more than 6% annually until 2008. Global economic conditions and tighter fiscal policy caused GDP to contract in 2009, but Turkey's well-regulated financial markets and banking system helped the country weather the global financial crisis, and GDP rebounded strongly to around 9% in 2010-11, as exports returned to normal levels following the recession. Two rating agencies upgraded Turkey's debt to investment grade in 2012 and 2013, and Turkey's public sector debt to GDP ratio fell to 33% in 2014. The stock value of Foreign Direct Investment reached nearly $195 billion at year-end 2014.
Despite these positive trends, GDP growth dropped to 4.4% in 2013 and 2.9% in 2014. Growth slowed considerably in the last quarter of 2014, largely due to lackluster consumer demand both domestically and in Europe, Turkey’s most important export market. High interest rates have also contributed to the slowdown in growth, as Turkey sharply increased interest rates in January 2014 in order to strengthen the country’s currency and reduce inflation. Turkey then cut rates in February 2015 in a bid to spur economic growth.
The Turkish economy retains significant weaknesses. Specifically, Turkey's relatively high current account deficit, domestic political uncertainty, and turmoil within Turkey's neighborhood leave the economy vulnerable to destabilizing shifts in investor confidence. Turkey also remains dependent on often volatile, short-term investment to finance its large current account deficit.
GDP (purchasing power parity): $1.508 trillion (2014 est.)
GDP (official exchange rate): $806.1 billion (2014 est.)
GDP - real growth rate: 2.9% (2014 est.)
GDP - per capita (PPP): $19,600 (2014 est.)
GDP - composition by sector: agriculture: 8.2%
industry: 26.9%
services: 64.9% (2014 est.)
Labor force: 27.56 million
note: about 1.2 million Turks work abroad (2014 est.)
Labor force - by occupation: agriculture: 25.5%
industry: 26.2%
services: 48.4% (2010)
Unemployment rate: 9.9% (2014 est.)
Household income or consumption by percentage share: lowest 10%: 2.1%
highest 10%: 30.3% (2008)
Investment (gross fixed): 16.9% of GDP (2009 est.)
Budget: revenues: $189.9 billion
expenditures: $209.7 billion (2014 est.)
Public debt: 36.5% of GDP (2014 est.)
Inflation rate (consumer prices): 8.9% (2014 est.)
Central bank discount rate: 5.25% (31 December 2011)
Commercial bank prime lending rate: 13.6% (31 December 2014 est.)
Agriculture - products: tobacco, cotton, grain, olives, sugar beets, hazelnuts, pulse, citrus; livestock
Industries: textiles, food processing, autos, electronics, mining (coal, chromite, copper, boron), steel, petroleum, construction, lumber, paper
Industrial production growth rate: 2.8% (2014 est.)
Electricity - production: 228.3 billion kWh (2012 est.)
Electricity - consumption: 197 billion kWh (2012 est.)
Electricity - exports: 1.236 billion kWh (2013 est.)
Electricity - imports: 7.425 billion kWh (2013 est.)
Oil - production: 47,670 bbl/day (2014 est.)
Oil - consumption: 675,500 bbl/day (2008 est.)
Oil - exports: 4,176 bbl/day (2013 est.)
Oil - imports: 379,600 bbl/day (2013 est.)
Oil - proved reserves: 296 million bbl (1 January 2015 est.)
Natural gas - production: 476 million cu m (2014 est.)
Natural gas - consumption: 48.45 billion cu m (2014 est.)
Natural gas - exports: 633 million cu m (2014 est.)
Natural gas - imports: 48.89 billion cu m (2014 est.)
Natural gas - proved reserves: 6.824 billion cu m (1 January 2014 est.)
Current account balance: -$45.85 billion (2014 est.)
Exports: $176.6 billion (2014 est.)
Exports - commodities: apparel, foodstuffs, textiles, metal manufactures, transport equipment
Exports - partners: Germany 9.6%, Iraq 6.9%, UK 6.3%, Italy 4.5%, France 4.1%, US 4% (2014)
Imports: $240.4 billion (2014 est.)
Imports - commodities: machinery, chemicals, semi-finished goods, fuels, transport equipment
Imports - partners: Russia 10.4%, China 10.3%, Germany 9.2%, US 5.3%, Italy 5%, Iran 4.1% (2014)
Reserves of foreign exchange and gold: $132 billion (31 December 2014 est.)
Debt - external: $402.4 billion (31 December 2014 est.)
Stock of direct foreign investment - at home: $208.6 billion (31 December 2014 est.)
Stock of direct foreign investment - abroad: $36.8 billion (31 December 2014 est.)
Exchange rates: Turkish liras (TRY) per US dollar - 2.191 (2014 est.), 1.9038 (2013 est.), 1.8 (2012 est.), 1.675 (2011 est.), 1.5028 (2010 est.)
economic climate  
Background: Turkey, in an attempt to become a member of the European Union (EU), is making many changes in regulations and standards. Since the economic crisis in 2001, Turkey adopted reforms and succeeded in creating a strong and stable economy. The strong economy attracting foreign direct investment, a growing and young population with increasing purchasing power is creating opportunities for foreign businesses wanting to enter the Turkish market.
Turkey is currently the 17th biggest economy in terms of its total GDP. A major economic reform program was started within the scope of an IMF stand-by arrangement, following the economic crisis in 2001. The arrangement, covering the period May 2005-May 2008, provides for US$10 billion of financial support from the fund which will be disbursed in 11 instalments. Successful implementation of the stand-by program accompanied by structural reforms saw the vulnerabilities in the economy decrease and have made the economy more attractive for foreign investment.
Unemployment and underemployment are still major problems. Income disparities and regional disparities are also large, which remain as major problems to be addressed. The unemployment rate is currently around 10 per cent.
Although manufacturing overtook agriculture in the 1980s as the major contributor to GDP, agriculture continues to play a major role in the Turkish economy, especially in employment. Agriculture accounts for around 11 per cent of GDP and 27 per cent of employment. There is a substantial unregistered economy, with estimates of its value ranging from 20 per cent to 50 per cent of economic activity.
Turkey is the EU’s seventh biggest trading partner and its 13th source of imports. EU countries take over 50 per cent of Turkey’s exports and provide almost 50 per cent of imports.
The reduction in inflation in Turkey has been a major achievement in the past few years, with annual average rate of inflation declining from around 80 per cent in the 1990s to the current level of around 10.9 per cent, the lowest for the last 35 years.
Banking, social security and taxation reforms continue. Social security reform aims to reduce the pension deficit to less than one per cent of GDP over the long term. Tax reforms, including personal income tax, VAT, corporate tax and financial intermediation tax, aim to improve efficiency, reduce incentives to remain in the informal economy, and offset expected structural decline in revenues as interest rates and revenues from financial intermediation taxes decline. Financial sector reforms include adoption of a new banking law, strengthening of banking regulatory and supervisory authority, and restructuring and privatisation of state banks.
Export opportunities:  
Update: This page was last updated on 10 November 2015
Sources: 1. CIA, The World Factbook, https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html
2. http://www.austrade.gov.au
3. DIBNC Experts Team