THE ECONOMY OF TURKEY

THE ECONOMY OF TURKEY

For having some idea on the general view of the economy of Turkey, we can check some of the descriptions made by various organizations. According to the definitions made by IMF, Turkish economy is specified as an emerging market economy. In another definiton stated in CIA factbook, Turkey is shown among world’s developed countries.  By some political scientists and economists, Turkey is described as one of the newly industrialized countries in the world. As nominal GDP Turkey is world 17th and 13th largest in GDP by PPP. The country is one of the leading manufacturers in sectors such as agricultural products, construction materials, textile, transportation equipment (including motor vehicles and ships), home appliances and consumer electronics.

Macroeconomic Trends

Turkey is one of the founder members of OECD and the G20. Turkey is also a party to the European Union – Customs Union since 1995.

According to the public debt stock, Turkey meets the 60 percent EU Maastricht Criteria since 2004. In terms of compliance with the EU Maastricht Criteria budget balance, Turkey’s budget deficit has decreased to less than 3 percent from more than 10 percent, between 2002 and 2011.

As previously mentioned, Turkey is defined as one of the developed countries by the CIA. Also it is often specified as a newly industrialized country by economists and political scientists. The economy of Turkey is described as an emerging market economy by Merrill-Lynch, The Economist and also by The World Bank which classifies Turkey as an upper-middle income country according to the per capita GDP of the country in 2007. Turkish labour force participation rate of 56,1% is the lowest among the OECD states’ median rate of 74%. According to a survey made by Forbes magazine in 2014, Turkey is the 5th with 37 billionaires in its finance capital Istanbul, in the 2013 world ranking in which Moscow has the first place (84 billionaires) in front of New York City (62 billionaires), Hong Kong (43 billionaires) and London (43 billionaires).

In 2009, various measures has been taken by the Turkish Government against the 2007-2012 financial crisis, such as temporarily cutting the tax rates on housing, automobiles and home appliances. Though resulting a decrease in automotive production, such precautions provided an increase of 7,2% in production of durable consumable goods. Also these measures received positive response from the Turkish stock market and credit rating agencies. Turkey’s rating has been raised one notch by the international credit rating agency Moody’s in January 2010. Also Fitch raised Turkey’s rating to investment level. Another rating progress followed this by Moody’s in May 2013 as Turkey’s government bond ratings lifted to Baa3. Being the first investment grade rating of Moody’s for Turkey in two decades, this upgrade was described as a result of the recent and expected future improvements of the nation, in the key public and economic metrics.

According to a 2013 report, western markets have the greatest potential for providing the fastest growth of Turkish exports, as an overview of the Turkish officials and executives. However, Turkey’s export share to the EU countries resulted less than 50% by 2018. As stated in the 2017 Foreign Investment Index, there has been a 10 times more increase in foreign direct investment outflow of the Turkish Companies’ in the past 15 years.

The stock exchange of Turkey (BIST) has reached over 110.000 points in the first half of 2018 which has been the highest level it has reached. Having an annual average growth rate of 4,9%, the economy of Turkey is expected to be one of the fastest growing economies among the OECD countries during 2015-2025.

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