Economic trends
Turkey, a country of 74 million inhabitants, has an economy in transition, a relatively high degree of dependence on agriculture and heavy industry, and a tertiary sector in full expansion. 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. Thus Turkey adopted a floating currency regime and has given total independence to the Central Bank. The GDP growth rate was high in recent years. In 2009, GDP growth was negative because of the international financial crisis impact, but should start up again from 2010.
The governement is following a budgetary strictness and inflation control policy. However, the current environement makes this orientation more and more difficult to justify to the population. The Turkish economy is also vulnerable because of its great dependence on exports and foreign investments. At the end of 2007, foreign investors held 73% of the Istabul market float, a fact which makes a massive withdrawal by investors and a deterioration of the Turkish lira fearful. The unemployment rate exploded due to the current economic crisis, to settle at 15%. Turkey is affected by the support of a significant informal sector.
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). 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 makes up nearly 30% of the GDP, 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.
International trade
The spearheads of Turkish foreign trade are the automobile and textile industries, followed by the food industry (raw and processed products), machinery and equipment and electronic equipment sectors respectively. The European Union is by far Turkey's leading customer (56.4% of Turkish exports). Yet the country shows a high trade deficit level because of its high energy dependence 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.
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