Turkey - Overview
To make a call from: 0
To make a call to: +90
Turkey is a "quasi-democratic" State in full transition. The army plays an important role, however informal, in the political life of the country.
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.
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
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).