Business Environment in Turkey
Turkey, a country of 74 million inhabitants, has an economy in transition, a relatively high degree of dependence on agriculture (11% of its territory is cultivated) and heavy industry (large mining sector and vast reserves of boron representing 60% of global reserves), and a tertiary sector in full expansion (hotel and catering business). After going through a serious economic and political crisis in 2001, Turkey has made a spectacular recovery thanks to a more favorable political climate but also to monetary, fiscal and structural reforms inspired by the World Bank and the IMF. Turkish economy is also based on manufacturing (country’s number one industrial activity). Since the 1980s, tourism has also been a significant source of income: Turkey is one of the ten most visited countries in the world. The financial crisis of course had an effect on the growth of Turkish economy; nevertheless the latter recovered relatively quickly and has grown by 3.5% in 2010. For 2011, the government foresees one point increase, thus bringing the growth rate to 4.3%. Indeed, the government has undertaken large economic reforms: adoption of a floating currency regime, giving total independence to the Central Bank, budgetary discipline and inflation control.
However, the Turkish economy remains vulnerable due to its high dependence on exports and foreign investment. With the current economic crisis, the unemployment rate has soared to around 15%. Turkey is also affected by its large informal sector.
|GDP (billions USD)||614.47||741.85e||797.61e||876.58||943.43e|
|GDP (Constant Prices, Annual % Change)||-4.7||8.2||4.6||4.5||4.1|
|GDP per Capita (USD)||8,711e||10,399||11,054||12,012||12,783|
|General Government Balance (in % of GDP)||-4.2||-3.5e||-3.1e||-2.9||-2.4|
|Inflation Rate (%)||6.3||8.6||5.7e||6.0||5.4e|
|Unemployment Rate (% of the Labor Force)||14.0||11.9e||11.4e||11.0e||10.6|
|Current Account (billions USD)||-13.85e||-28.35||-32.53||-33.46e||-|
|Current Account (in % of GDP)||-2.3||-4.0e||-4.4||-4.3||-|
Source: IMF - World Economic Outlook Database
Note: (e) Estimated Data
Main Sectors 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). 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 22milions in profits, thus making it one of the key sources of foreign currency for the country.
|Breakdown of Economic Activity By Sector||Agriculture||Industry||Services|
|Employment By Sector (in % of Total Employment)||26.2||25.7||48.1|
|Value Added (in % of GDP)||9.3||25.8||64.9|
|Value Added (Annual % Change)||3.5||-8.4||-3.2|
Source: World Bank - Last Available Data.
|Turkish New Lira (TRY) - Average Annual Exchange Rate For 1 USD||1.43||1.34||1.43||1.30||1.30|
Source: World Bank
Indicator of Economic Freedom
- Moderately free
- World Rank:
- Regional Rank:
Foreign Trade in Figures
The spearheads of Turkish foreign trade are the automobile and textile industries (the latter employing 18% of the workforce), followed by the food industry (raw and processed products), machinery and equipment and electronic equipment, steel and chemical sectors respectively. The European Union is by far Turkey's leading customer (56.4% of Turkish exports), followed by the United States, China and Iraq. Yet the country shows a high trade deficit level because of its high energy dependency on Russia and its Middle Eastern neighbors. In addition, like the household appliance sector, which paradoxically is a high export industry, many components (about 80%) are imported to subsequently be assembled in Turkey. Despite government efforts to promote innovation (namely with the development of competitiveness centers and the establishment of tax credits in favor of Research and Development), Turkish exports have relatively low added value. Similarly, Turkish exports are still not very present on markets with high development potential (China or Eastern Europe) and suffer from being compared to German ones.
|Foreign Trade Indicators||2006||2007||2008||2009||2010|
|Imports of Goods (million USD)||139,576||170,063||201,964||140,928||185,497|
|Exports of Goods (million USD)||85,535||107,272||132,027||102,143||113,899|
|Imports of Services (million USD)||10,729||14,528||16,569||15,544||18,210|
|Exports of Services (million USD)||25,246||28,586||34,396||32,626||32,750|
|Imports of Goods and Services (Annual % Change)||6.9||10.7||-4.1||-14.3||-|
|Exports of Goods and Services (Annual % Change)||6.6||7.3||2.7||-5.3||-|
|Imports of Goods and Services (in % of GDP)||27.6||27.5||28.3||24.4||-|
|Exports of Goods and Services (in % of GDP)||22.7||22.3||23.9||23.2||-|
|Trade Balance (million USD)||41,059||46,795||53,021||24,896||-|
|Trade Balance (Including Service) (million USD)||27,110||32,790||35,331||-||-|
|Foreign Trade (in % of GDP)||50.3||49.8||52.2||47.7||-|
Source: WTO - World Trade Organization ; World Bank
Main Partner Countries
(% of Exports)
|United Arab Emirates||2.8%|
|Other partnersClose extended list||67.8%|
(% of Imports)
|Other partnersClose extended list||55.5%|
Sources of General Economic Information
State Planning Organization
Ministry of Agriculture and Rural Affairs
Ministry of Industry and Trade
Turkish Ministry of Finances
- Statistical Office
Turkish Statistical Institute
- Central Bank
Central Bank of The Republic of Turkey
- Stock Exchange
Istanbul Stock Exchange
- Search Engines
- Economic Portals
Ministry of Foreign Trade
Capital Markets Board of Turkey
- Executive Power
- The President of the Republic is the Head of State. He is elected by indirect universal suffrage for a single 7 year term of office, by secret ballot in Parliament. However, following a constitutional change in 2007, the next election (2014) will be by direct universal suffrage. He has the function of an arbitrator (promulgation of laws, signature of decrees..) and he appoints the Prime Minister and the Council of Ministers. The President also appoints the judicial organs and other governmental organs. His role is above all ceremonial but his position benefits from considerable symbolic importance.
The Prime Minister is the head of the government. He is elected by Parliament when there is a vote of confidence in the government, for a five year term of office. He holds the executive power, which includes law enforcement and managing the current business of the country. The government he directs is responsible before Parliament which can overturn it with an absolute majority of its members.
- Legislative Power
- Legislative power in Turkey is unicameral. The Parliament, called Great National Assembly of Turkey, has 550 seats, and its members are elected by universal suffrage for five years according to a system of proportional representation.
- Main Political Parties
- - The AKP (Justice and Development Party) - a conservative party, moderately Islamic
- The CHP (Republican People's Party) - a nationalist, social-democratic party
- The MHP (Nationalist Movement Party) - extreme right nationalist party
- The DEHAP (Democratic People's Party) and Independents - left wing party, pro-Kurd
- The ANAP (Motherland Party) - center right and liberal party
- The DYP ( Just Way Party) - non-religious, right wing conservative party.
- Current Political Leaders
- President : Abdullah GÜL (since August 2007) - AKP and former Minister of Foreign Affairs (March 2003 to July 2007 )
Prime Minister: Recep Tayyip ERDOGAN (since March 2003) - AKP
Minister of Foreign Affairs: Ali BABACAN
Minister of Foreign Trade: Kürsad TÜZMEN
Minister of Finance: Kemal UNAKITAN
Minister of the Interior: Besir ATALAY
- Next Election Dates
- Presidential : August 2014
Legislative : November 2012
Indicator of Freedom of the Press
- World Rank:
- 20 places down compared to 2008
Indicator of Political Freedom
- Partly Free
- Political Freedom:
- Civil Liberties:
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