This document provides an analysis of Turkey's economy conducted by a research team. It examines key macroeconomic indicators such as GDP, unemployment, inflation, interest rates, exchange rates, and trade balance. The analysis finds that while Turkey has experienced strong GDP growth in recent decades, unemployment and economic instability remain challenges. The conclusion evaluates Turkey's economic strengths, weaknesses, opportunities, and threats.

1.
An
Examination
of
the
Turkish
Economy
Team
Research
Project:
Callie
Alepede
Ali
Miller
Adam
Sparling
Eduardo
Villarreal
December
14,
2012
GR
522
Economic
Environment
of
the
Firm

2. 2
Contents
I.
Introduction
..........................................................................................................................................
3
II.
Turkey’s
Economic
Situation
................................................................................................................
4
A.
Gross
Domestic
Product
...................................................................................................................
4
B.
Unemployment
................................................................................................................................
5
C.
Inflation
............................................................................................................................................
5
D.
Interest
Rates
...................................................................................................................................
6
E.
Exchange
Rates
.................................................................................................................................
7
F.
Balance
of
Trade
...............................................................................................................................
7
III.
Turkey’s
Financial
Situation
................................................................................................................
9
IV.
Monetary,
Fiscal
and
Economic
Policies
...........................................................................................
10
V.
Economic
Forecast
.............................................................................................................................
12
VI.
Trade
Barriers
...................................................................................................................................
13
VII.
International
Transaction
Accounts
................................................................................................
15
VIII.
Conclusion
......................................................................................................................................
15
A.
Strengths
........................................................................................................................................
15
B.
Weaknesses
....................................................................................................................................
16
C.
Opportunities
.................................................................................................................................
16
D.
Threats
...........................................................................................................................................
17
IX.
Exhibits
..............................................................................................................................................
18
A.
Exhibit
A
.........................................................................................................................................
18
B.
Exhibit
B
.........................................................................................................................................
22
C.
Exhibit
C
..........................................................................................................................................
23
X.
Works
Cited
........................................................................................................................................
24

3. 3
I. Introduction
The
Republic
of
Turkey
was
founded
in
1923
by
Mustafa
Kemal
Ataturk.
Turkey
has
an
estimate
of
71.9
million
people
(2008
census).
Its
capital
is
in
Ankara
and
its
official
language
and
religion
are
Turkish
and
Muslim
respectively.
Turkey
has
many
natural
resources
including
but
not
limited
to
coal,
mercury,
copper,
and
sulphur.
Along
with
these
resources
of
course
come
hazards;
one
of
which
is
Turkey
being
prone
to
severe
and
damaging
earthquakes.
Turkey’s
economy
is
the
sixth
largest
in
Europe
and
the
sixteenth
in
the
world.
This
may
not
be
a
surprise
due
to
the
country’s
incredibly
centralized
location.
Turkey’s
location
includes
borders
on
the
Black
and
Aegean
Seas
as
well
as
being
between
countries
such
as
Bulgaria,
Greece,
and
Syria.
In
this
economy,
a
few
of
the
major
industries
in
Turkey
are
automotive,
textiles
and
clothing,
along
with
iron
and
steel
(Foreign and Commonwealth Office).
All
of
these
facts
will
help
to
explain
and
discuss
some
complex
topics
on
Turkey’s
past
economy,
where
Turkey
is
presently,
as
well
as
where
it
looks
to
be
headed
in
the
near
future.
This
paper
will
discuss
the
macroeconomic
and
international
trade
situation
in
Turkey.
More
specific
topics
included
will
be
information
on
GDP
growth,
unemployment,
and
monetary
exchange
rates.
Also
included
will
be
evaluations
and
considerations
of
Turkey’s
deficit
and
debt
situation,
possible
forecast
of
the
domestic
economy,
trade
barriers,
and
an
overall
description
of
Turkey’s
current
economy.
The
paper
will
conclude
with
a
SWOT
Analysis.

4. 4
II. Turkey’s
Economic
Situation
A. Gross
Domestic
Product
With
a
Gross
Domestic
Product
(PPP)
of
$1.288
trillion,
Turkey
ranks
as
one
of
the
20
highest
in
the
world (CIA).
Since
1990,
Turkey’s
GDP
(PPP)
has
grown
by
over
500%,
its
GDP
at
current
USD
by
300%
and
its
GDP
at
constant
2000
USD
by
100%.
Turkey
has
had
a
constant
growth
since
1990,
which
has
accelerated
since
1998.
Turkey’s
GDP
in
constant
2000
USD
averages
a
growth
of
6%
per
year,
a
good
rate
for
a
developing
country.
“Turkey
is
expected
to
be
the
highest
growing
OECD
member
country
between
2011
and
2017,
with
an
annual
average
growth
rate
of
6.7%.”
(HSBC)
Its
growth,
however,
has
not
been
constant
and
stable
through
the
years.
While
reaching
growth
of
over
8%
in
some
years,
Turkey’s
GDP
has
also
fallen
by
close
to
6%
in
others.
Turkey
seems
to
have
an
economic
cycle
of
four
to
six
years.
0
200
400
600
800
1,000
1,200
1,400
USD
billions
Turkey's
GDP:
current,
PPP
and
constant
GDP
(constant
2000
US$)
GDP
(current
US$)
GDP,
PPP
(current
internadonal
$)
Source:
World
Bank
From
Exhibit
A
-­‐8
-­‐6
-­‐4
-­‐2
0
2
4
6
8
10
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
GDP
and
GDP
per
capita
Growth
1990-­‐2011
GDP
growth
(annual
%)
GDP
per
capita
growth
(annual
%)
Source:
World
Bank
From
Exhibit
A

5. 5
Part
of
its
growth,
and
probably
of
the
instability
of
it,
is
a
result
of
Turkey’s
focus
on
services.
Services
account
for
67%
of
Turkey’s
GDP,
while
its
industrial
activities
for
only
23%;
leaving
agriculture
at
a
low
10%.
B. Unemployment
Unfortunately
for
the
Turkish
labor
force,
Turkey’s
constant
GDP
growth
has
not
produced
as
many
jobs
as
the
economy
needed.
Unemployment
has
had
a
rising
trend
since
1990,
from
a
starting
point
of
8%
to
12%
in
2010.
Unemployment
reached
its
lowest
point
in
2000
at
7%
and
its
highest
point
in
2009
at
14%.
This
constant
rise
in
unemployment
should
be
a
major
concern
not
only
for
the
Turkish
labor
force,
but
mainly
for
the
Turkish
government.
C. Inflation
An
achievement
for
the
Turkish
economy
has
been
the
reduction
and
stability
obtained
in
inflation.
After
years
of
increasing
consumer
prices
and
inflation
rates
of
over
80%,
Turkey
has
managed
to
keep
its
inflation
around
10%
since
2004.
10%
23%
67%
GDP
by
sector
Agriculture
Industry
Services
Source:
CIA,
The
World
Factbook
0
5
10
15
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
%
of
Total
Labor
Force
Unemployment
(%
of
total
labor
force),
1990-­‐2010
Unemployment,
total
(%
of
total
labor
force)
Source:
World
Bank
From
Exhibit
A
0
20
40
60
80
100
120
InflaKon,
consumer
prices
(annual
%)
1990-­‐2011
Infladon,
consumer
prices
(annual
%)
Source:
World
Bank
From
Exhibit
A

6. 6
D. Interest
Rates
As
well
as
in
its
inflation,
Turkey
has
found
stability
in
its
interest
rate.
After
a
period
in
which
Turkey’s
benchmark
interest
rate
would
fluctuate
around
100%,
reaching
peaks
of
up
to
500%,
the
Turkish
economy
has
maintained
a
constant
decline
in
its
interest
rate
since
2002.
By
maintaining
levels
under
40%,
the
Central
Bank
of
Turkey
has
promoted
investment
and
expansion,
while
discouraging
capital
inflows.

7. 7
E. Exchange
Rates
Since
2005,
the
Turkish
Lira
has
depreciated
close
to
30%
compared
to
USD
and
EUR.
This
depreciation,
however,
boosts
Turkish
exports
by
making
their
products
cheaper
and
more
competitive,
especially
when
competing
with
products
from
the
European
Union
(Turkey’s
main
trade
partner).
The
two
highest
depreciations
of
the
Turkish
Lira
were
on
2008
and
2011
(see
graph
below),
which
is
explained
by
the
financial
crisis
in
2008
and
the
downturn
in
the
EU’s
financial
and
economic
situation
since
2011.
F. Balance
of
Trade
Trade
has
a
significant
importance
on
Turkey’s
economy.
Since
1994,
trade
accounts
for
over
40%
of
Turkey’s
GDP.
Not
only
does
Turkey’s
strategic
geographic
location
help
promote
trade,
Turkey
joined
the
World
Trade
Organization
in
1995
and
signed
free
trade
and
custom
union
agreements
with
all
European
Union
members.
In
fact,
the
EU
is
Turkey’s
main
trade
partner
in
both
imports
and
exports,
followed
by
Russia,
USA,
UAE,
Iran
and
Iraq (HSBC).
0
10
20
30
40
50
60
Trade
as
%
of
GDP
Trade
(%
of
GDP)
Source:
World
Bank
From
Exhibit
A

8. 8
Turkey’s
focus
on
services
has
taken
a
toll
on
its
Balance
of
Trade.
Turkey
is
not
producing
nearly
as
many
goods
as
their
economy
demands,
resulting
in
a
large,
constantly
increasing
deficit
in
the
Balance
of
Trade.
Even
though
Turkey’s
exports
on
services
are
twice
as
much
as
their
imports,
the
surplus
is
only
of
US$20
billion,
compared
to
a
deficit
of
close
to
US$100
billion
on
goods.
When
analyzing
the
graphs,
it
is
noticeable
that
Turkey’s
focus
on
services
has
not
paid
off
in
their
trade
accounts.
On
the
other
hand,
Turkey’s
trade
of
goods
has
increased
exponentially
since
2002,
by
100
billion
USD
in
its
exports
and
over
150
billion
USD
in
its
imports,
while
its
trade
of
services
has
grown
much
slower.
0
5
10
15
20
25
30
35
40
45
Current
USD
billions
Service
Exports
and
Imports,
1990-­‐2011
Service
exports
(BoP,
current
US
$)
Service
imports
(BoP,
current
US
$)
Source:
World
Bank
From
Exhibit
A
0
50
100
150
200
250
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Current
USD
billions
Goods
Exports
and
Imports,
1990-­‐2011
Goods
imports
(BoP,
current
US
$)
Goods
exports
(BoP,
current
US
$)
From
Exhibit
A

9. 9
Turkey’s
trade
agreements
include all
EU
members,
Albania,
Bosnia
Herzegovina,
Croatia,
Switzerland,
Norway,
Iceland
and
Liechtenstein,
Egypt,
Georgia,
Israel,
Macedonia,
Montenegro,
Morocco,
Palestine,
Georgia,
Serbia,
Chile,
Tunisia
and
Syria
(HSBC).
III. Turkey’s
Financial
Situation
Of
late,
Turkey
is
one
of
the
world’s
fastest
growing
economies.
In
recent
years,
Turkey
has
made
a
significant
push
to
reduce
government
spending
and
in
turn,
has
reduced
the
overall
public
debt
to
39%
of
GDP
in
2011.
This
is
expected
to
drop
another
1.5
points
in
2012
according
to
the
IMF (Port
Turkey).
To
put
this
in
perspective,
Turkey
has
a
lower
public
debt
to
GDP
ratio
than
countries
such
as
Japan,
USA
and
England,
placing
Turkey
amongst
lowest
levels
of
public
debt
to
GDP
in
the
world.
This
is
a
positive
indication
to
potential
investors,
as
it
gives
them
confidence
Turkey
is
currently
making,
and
will
continue
to
make
future
payments
on
debt.
Therefore,
Turkey
will
see
significantly
lower
interest
rates
on
debt
as
well
as
investors
will
move
forward
with
more
confidence
in
regard
Turkish
government
bonds.
Unfortunately,
while
the
public
debt
has
been
on
the
decline
in
recent
years,
the
country’s
private
debt
continues
to
increase.
As
they
continue
to
grow
and
attract
attention
in
the
world
economy,
there
is
increased
focus
on
Turkey
reducing
their
deficit,
particularly
in
regard
to
private
debt.
0
20
40
60
80
100
120
140
160
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Current
USD
billions
Exports,
Goods
and
Services.
1990-­‐2011
Goods
exports
(BoP,
current
US$)
Service
exports
(BoP,
current
US$)
Source:
World
Bank
From
Exhibit
A
0
50
100
150
200
250
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Current
USD
billions
Imports,
Goods
and
Services.
1990-­‐2011
Goods
imports
(BoP,
current
US$)
Service
imports
(BoP,
current
US$)
Source:
World
Bank
From
Exhibit
A

10. 10
Of
Turkey’s
$143B
in
foreign
debt
service,
over
85%
belongs
to
the
private
sector.
Netting
the
public
and
private
debt,
Turkey
has
remained
relatively
flat
in
relation
to
total
debt
service
over
the
last
ten
years
with
the
exception
of
a
spike
in
2009
relating
to
the
economic
crisis
felt
around
the
world.
IV. Monetary,
Fiscal
and
Economic
Policies
At
the
moment,
Turkey
is
one
of
the
fastest
growing
economies
and
has
had
a
rapidly
growing
GDP.
Because
it
has
been
growing
so
quickly,
Turkey
has
experienced
some
economic
problems.
One
of
them
is
that
it
has
had
a
higher
inflation
then
the
central
bank’s
target,
meaning
that
the
Turkish
lira
is
worth
less
than
desired.
Along
with
this,
Turkey
is
also
extremely
dependent
on
foreign
capital
to
stimulate
its
economy,
something
that
makes
the
country
very
vulnerable.
Since
Turkey
is
so
dependent
on
foreign
countries,
these
partnerships
determine
if
the
country
has
enough
capital
inflow
or
not.
If
the
global
economy
is
weak
and
investors
are
not
confident
in
the
Turkish
economy,
they
will
not
invest
in
the
country
and
Turkey
will
suffer.
On
the
other
hand,
if
investors
have
a
positive
outlook
and
are
willing
to
take
risks,
they
will
invest
in
Turkey
resulting
in
more
capital
inflow.
Regarding
Turkey’s
monetary
policy,
it
does
not
have
a
specific
benchmark
interest
rate
targeted
in
order
to
maintain
economic
stability.
Instead,
the
Central
Bank
of
the
Republic
of
Turkey
(CBRT)
has
a
wide
interest-­‐rate
“corridor”
that
it
uses
accordingly.
When
it
has
a
large
amount
of
capital
inflows
and
foreign
investors
are
confident
about
the
economy,
resulting
in
more
money
inflow,
the
CBRT
sets
a
lower
borrowing
rate
within
that
corridor,
which
discourages
foreign
investors
from
investing
in
the
country.
This
reduces
the
“hot
money”
that
is
put
into
the
country,
which
is
the
money
invested
into
Turkey
by
foreign
countries
so
that
they
can
gain
on
interest
rate
differences.
On
the
other
hand,
when
there
are
not
a
lot
of
capital
flows
within
Turkey,
a
higher
interest
rate
at
the
top
of
the
corridor
is
used.
This
encourages
more
investments
so
that
cash
inflow
in
increased
once
again.
Turkey

11. 11
regulates
how
much
capital
inflow
in
coming
into
the
country
by
increasing
or
decreasing
the
interest
rate
within
the
corridor,
appropriately.
This
monetary
policy
is
criticized
by
some
saying
that
Turkey
should
use
the
more
common
method
of
having
a
benchmark
interest
rate
rather
than
using
the
corridor
previously
explained.
Since
there
is
no
benchmark
interest
rate,
banks
are
affected
because
they
do
not
know
what
the
lira
will
be
worth
therefore
they
do
not
know
how
to
price
the
loans.
The
CBRT
supports
its
method
believing
that
this
is
the
best
way
that
they
can
control
the
foreign
capital
inflow
(The
Economist).
Due
to
the
fact
that
there
has
been
significant
depreciation
of
the
Turkish
lira
in
the
past
year,
the
CBRT
widened
the
interest-­‐rate
corridor
upwards
and
increased
the
lending
rates
in
October
2011,
meaning
that
the
policy
has
been
contractionary.
This
has
helped
because
it
decreased
the
volatility
of
exchange
rates,
compared
to
other
emerging
market
economies
(Central
Bank
of
the
Republic
of
Turkey).
The
Central
Bank
has
continued
tightening
monetary
policy
this
year
in
order
to
fight
the
continuing
depreciation
of
the
lira.
Regarding
Turkey’s
fiscal
policy,
the
country
performed
fiscal
reforms
after
the
serious
financial
crisis
that
affected
the
world
in
2001,
which
strengthened
the
country’s
economy
to
about
6%
growth
per
year
up
until
2008
(IndexMundi).
Towards
the
end
of
2008
and
into
2009
and
on,
the
country
was
impacted
once
again
by
the
global
financial
crisis
and
experienced
increasing
budget
deficits;
during
that
time,
Turkey
implemented
some
fiscal
stimulus
packages,
which
resulted
in
a
further
drop
in
fiscal
balances.
The
fiscal
stimulus
packages
included
efforts
to
promote
consumption
spending
by
reducing
consumption
tax
rates.
There
were
also
measures
put
forth
to
help
lessen
unemployment
by
allowing
people
to
work
for
fewer
days
a
week
and
also
through
the
implementation
of
training
programs.
It
was
estimated
that
the
cost
of
these
stimulus
packages
was
about
0.8%,
2.1%,
and
1.6%
of
GDP
in
2008,
2009,
and
2010,
respectively
(Uyger).
In
the
past
two
years,
Turkey
has
reduced
its
government
deficit,

12. 12
but
according
to
Moody’s,
this
has
been
due
to
reduced
expenditure
and
not
increased
revenue.
It
is
believed
by
some
economists
that
the
“budget
deficit
may
rise
to
as
much
as
2.6%
of
GDP
because
government
revenues
are
too
dependent
on
economic
growth
and
the
tax
breaks
to
exporters
limit
gains
from
rising
foreign
sales”
(Peker).
V. Economic
Forecast
Turkey’s
five
year
economic
forecast
is
promising.
There
is
significant
growth
in
GDP
and
gross
exports
through
2017.
Specifically
with
GDP,
there
is
an
expected
6.7%
average
growth
over
the
next
five
years
putting
Turkey
on
pace
to
be
the
highest
growth
nation
in
regard
to
GDP
among
the
OECD
nations.
The
Turks
are
placing
heavy
emphasis
on
increased
exports
to
neighboring
nations
in
an
effort
to
decrease
the
nation’s
trade
deficit.
This
is
evidenced
by
their
recent
agreement
between
Sberbank,
the
largest
bank
in
Russia
and
Eastern
Europe,
and
the
Turkish
Eximbank.
The
agreement
calls
for
1
billion
USD
to
increase
Turkey’s
exports
into
Russia
and
Eastern
European
nations.
(Port Turkey)
8.00
10.00
12.00
14.00
16.00
18.00
20.00
2010
2011
2012
2013
2014
2015
2016
2017
Current
InternaKonal
Dollars
(in
thousands)
Turkey
GDP
per
capita
(PPP)
From
Exhibit
C
0
1
2
3
4
5
6
7
2010
2011
2012
2013
2014
2015
2016
2017
Growth
%
Turkey's
Expected
Growth
in
Exports
of
Goods
and
Services
From
Exhibit
C

13. 13
Even
though
the
expected
forecast
is
favorable,
Turkey
is
an
emerging
nation
with
a
volatile
history
of
political
and
socio-­‐economic
turmoil.
Any
weight
to
this
forecast
must
be
applied
with
caution
as
there
are
many
underlying
factors
that
can
potentially
affect
their
economic
performance.
VI. Trade
Barriers
Trade
barriers
are
any
type
of
policy
that
puts
restrictions
on
(international)
trade
in
any
way.
In
Turkey,
trade
barriers
are
the
norm.
Turkey
is
a
member
of
the
World
Trade
Organization
(WTO)
and
has
been
since
March
of
1995 (World Trade Organization).
Also,
according
to
the
Office
of
the
United
States
Trade
Representative,
Turkey
is
currently
the
twenty-­‐first
largest
export
market
for
United
States
goods
(U.S.T.R.)
which
is
fairly
substantial
for
our
country.
Some
of
these
barriers
to
trade
include
import
policies,
investment
barriers,
and
barriers
to
owning
real
estate.
Turkey
has
free
trade
agreements
with
all
EU
member
countries (U.S.T.R.).
But
with
this
being
said,
certain
import
policies
include
high
tariffs
on
certain
products
such
as
agricultural
products
(fruit
for
example)
and
in
addition,
in
2011
the
government
in
Turkey
decided
to
increase
tariffs
on
apparel.
Special
“import
licenses”
are
also
needed
for
importing
from
Turkey.
Through
some
research,
it
seems
as
though
the
process
of
receiving
one
of
these
import
licenses
is
lengthy
and
difficult.
It
is
unclear
whether
or
not
Turkey
wants
its
import
licenses
to
be
hard
to
obtain.
It
could
be
the
fact
that
whatever
countries
are
willing
to
go
through
the
process
are
worthy
of
sharing
the
wealth
in
Turkey’s
goods.
Certain
investment
barriers
in
Turkey
include,
but
are
not
limited
to,
the
energy
market
and
dominance
in
the
oil
industry.
In
Turkey,
the
energy
market
seems
to
be
mostly
privatized,
making
this
area
difficult
to
invest
in.
The
importation
of
gas
also
seems
to
be
a
difficult
area
to
become
involved
in.
“BOTAS”
has
remained
the
dominant
importer
of
gas
and
owns
a
whopping
86%
of
the
market.
In
general,
foreign-­‐owned
real
estate
has
been
a
reoccurring
issue.
Some
of
the
barriers
to

14. 14
owning
real
estate
in
Turkey
are
very
interesting.
From
the
Office
of
the
United
States
Trade
Representative
website,
it
was
stated
that:
No
foreign
individual
may
own
more
than
2.5
acres,
and
all
foreign
individuals
together
can
own
no
more
than
10%
of
the
land
in
any
given
developmental
zone…there
are
however,
no
limits
on
the
amount
of
land
that
can
be
owned
by
foreign
companies
with
a
legal
presence
in
Turkey,
so
long
as
the
land
is
being
used
in
connection
with
their
business
activities. (U.S.T.R.)
In
doing
research,
it
was
clear
that
there
is
not
much
information
on
real
estate
available
in
Turkey
and
who
owns
what,
which
might
create
trouble
for
investors
hoping
to
enter
the
markets
in
Turkey.
This
may
be
an
area
that
can
be
improved
upon
in
the
future.
Some
miscellaneous
barriers
to
trade
include
but
are
not
limited
to
internet
usage,
certain
career
practices,
and
elements
of
the
judicial
system.
There
have
been
past
court
decisions
that
have
blocked
certain
websites
in
Turkey
such
as
YouTube
and
MySpace.
Details
are
not
completely
clear,
but
the
restrictions
on
certain
internet
website
usage
are
a
barrier
that
Turkey
has
decided
to
pursue.
Career
practices
such
as
accounting,
law,
and
medicine
are
strictly
monitored.
According
to
the
Office
of
the
United
States
Trade
Representative,
to
be
an
accountant
or
a
lawyer
in
Turkey,
one
needs
to
have
Turkish
citizenship.
If
one’s
career
is
in
medicine,
one
might
need
approval
in
order
to
be
a
“foreign
doctor”
in
Turkey.
Finally,
the
judicial
system
is
looked
upon
as
to
be
biased
against
anyone
from
outside
of
the
country.
It
could
be
difficult
to
be
involved
in
a
situation
where
the
law
is
not
on
the
side
of
the
victim,
but
on
the
side
of
the
citizen.
This
is
another
way
that
investing
in
or
become
involved
within
the
borders
of
Turkey
could
be
a
possible
challenge.

15. 15
VII. International
Transaction
Accounts
While
Turkey’s
Capital
Account
on
its
Balance
of
Payments
(refer
to
Exhibits
A
and
B)
has
maintained
a
deficit
for
almost
every
year
since
1990,
the
Financial
Account’s
surplus
(mostly
driven
by
direct
and
portfolio
investments
in
Turkey)
has
provided
the
balance
needed.
Turkey’s
global
balance
has
had
a
surplus
in
almost
every
year
since
1990,
with
the
exceptions
of
2000,
2001
and
2008.
Turkey’s
reserve
assets
account
has
decreased
by
US$72
billions
since
1990.
VIII. Conclusion
Turkey’s
current
economic
climate
is
extremely
complex
and
interconnected
with
the
future
of
different
regions
around
the
world.
Therefore,
to
provide
a
summary
of
Turkey’s
current
economic
status
as
well
as
their
potential
future
involvement
in
the
world
economy,
a
SWOT
analysis
will
provide
the
necessary
insight
to
understand
the
full
picture.
A. Strengths
• Turkey’s
geographic
location,
the
bridge
between
Asia
and
Europe,
gives
them
access
to
the
world’s
oceans
as
a
distribution
channel
and
major
world
port
between
the
two
continents.
This
has
led
to
economic
integration,
such
as
the
Customs
Union
between
Turkey
and
the
European
Union,
allowing
them
relatively
free
trade
with
the
participating
nations.
• Due
to
Turkey’s
physical
location
and
the
economic
integration
with
the
EU,
Turkey
has
the
highest
rate
of
GDP
growth
among
OECD
countries,
forecasted
through
2017
at
an
expected
6.7%.
• Further
support
to
this
forecasted
growth
can
be
explained
by
Turkey’s
year
over
year
decrease
in
public
debt
in
relation
to
GDP.
As
previously
mentioned,
Turkey’s
public
debt
to
GDP
ratio
ranks
8th
in
the
world
at
37%.

16. 16
B. Weaknesses
• As
Turkey
continues
to
grow
into
one
of
the
world’s
leading
economies,
their
dependence
on
Foreign
Direct
Investment
is
becoming
a
potential
weakness
in
terms
of
economic
stability.
Much
of
the
nation’s
FDI
is
in
the
form
of
soft
assets
within
the
financial
sector,
causing
the
investment
to
be
extremely
liquid
and
therefore
volatile
from
the
Turkish
perspective.
•
As
a
bridge
between
Europe
and
Asia,
Turkey
is
inherently
diverse.
While
in
a
sense
this
is
part
of
Turkey’s
appeal
throughout
the
world,
it
creates
a
dichotomy
between
eastern
and
western
Turkey.
Not
only
is
there
a
cultural
barrier
but
there
is
a
socio-­‐economic
division
between
the
regions,
as
the
east
is
primarily
a
local
agricultural
economy
versus
the
west
where
industry,
western
banking
and
political
stability
dominate
the
landscape.
With
the
continuing
economic
growth
of
the
nation,
Turkey
will
need
to
address
these
contrasting
regions
in
effort
to
stave
off
political
turmoil
and
create
a
stable
nationwide
infrastructure.
C. Opportunities
• Over
the
last
decade,
Turkey
has
been
fulfilling
requirements
set
forth
by
the
European
Union
in
an
effort
to
become
part
of
the
economic
union.
If
Turkey
is
admitted
into
the
EU,
the
opportunities
for
growth
and
expansion
would
skyrocket,
since
Turkey
would
be
able
to
take
advantage
of
all
of
EU’s
trade
agreements
with
other
countries.
• Second
only
to
the
EU,
Turkey’s
trade
partnership
with
Russia
is
perhaps
the
most
realistic
opportunity.
Russia’s
recent
focus
on
their
economic
policy
towards
open
trade
and
their
recent
admittance
into
the
World
Trade
Organization,
will
result
in
easier
trade
with
lower
tariffs.
The
size
and
ease
of
access
into
the
Russian
market,
along
with
all
of
Turkey’s
free
trade

17. 17
agreements
with
19
other
countries,
hedge
against
the
inherent
risk
of
tying
the
Turkish
economy
to
the
EU.
D. Threats
• As
mentioned
above,
Turkey
has
been
steering
their
economy
in
the
direction
advised
by
the
EU
in
effort
to
join
the
union.
As
the
Turkish
economy
gains
strength
in
the
world’s
eyes,
recent
economic
uncertainty
within
the
EU
has
presented
a
potential
threat.
If
the
nation
continues
to
drive
their
economy
with
the
goal
of
joining
the
EU
as
their
main
strategy,
Turkey’s
economy
will
risk
their
future
on
the
success
of
the
European
Union.
• Turkey’s
diversity
is
a
key
factor
of
their
recent
and
future
success.
As
the
bridge
between
the
two
continents,
the
nation
plays
host
to
cultures
across
the
globe.
The
rewards
that
are
inherently
tied
to
cultural
diversity
do
not
come
without
potential
threats.
As
home
to
a
substantial
Islamic
population
and
due
to
their
close
proximity
to
the
Middle
East,
Turkey’s
future
is
influenced
by
the
future
of
that
region.
As
political
instability
within
the
Middle
East
continues
to
mount,
the
Turkish
economy
will
continue
to
be
viewed
as
a
volatile
investment,
particularly
in
the
near
future
as
the
eastern
boarder
remains
a
battleground
with
neighboring
Syria.

18. 18
IX. Exhibits
A. Exhibit
A
1990 1991 1992 1993 1994 1995
GDP (constant 2000
US$)
186,641,240,190 187,985,577,937 197,451,845,376 212,559,409,689 202,636,823,219 218,601,092,943
GDP (current US$) 150,676,291,094 151,041,248,184 159,095,003,188 180,422,294,772 130,690,172,297 169,485,941,048
GDP growth (annual
%)
9 1 5 8 -5 8
GDP per capita
growth (annual %)
7 -1 3 6 -6 6
GDP per capita, PPP
(current international
$)
4,430 4,551 4,855 5,271 5,004 5,387
GDP, PPP (current
international $)
239,819,132,073 250,619,631,570 271,925,404,605 300,242,861,558 289,800,534,768 317,086,230,459
Goods exports (BoP,
current US$)
13,026,000,000 13,667,000,000 14,891,000,000 15,611,000,000 18,390,000,000 21,975,000,000
Goods imports (BoP,
current US$)
22,453,000,000 20,947,000,000 22,942,000,000 29,655,000,000 22,524,000,000 35,089,000,000
Imports of goods
and services (% of
GDP)
18 17 17 19 20 24
Imports of goods
and services (annual
% growth)
33 -5 11 36 -22 30
Imports of goods
and services (BoP,
current US$)
25,524,000,000 24,165,000,000 26,567,000,000 33,603,000,000 26,306,000,000 40,113,000,000
Present value of
external debt (current
US$)
.. .. .. .. .. ..
Service exports
(BoP, current US$)
8,016,000,000 8,372,000,000 9,407,000,000 10,652,000,000 10,801,000,000 14,606,000,000
Service imports
(BoP, current US$)
3,071,000,000 3,218,000,000 3,625,000,000 3,948,000,000 3,782,000,000 5,024,000,000
Short-term debt (%
of total external debt)
19 18 22 27 17 21
Short-term debt (%
of total reserves)
125 138 169 236 131 113
Trade (% of GDP) 31 30 32 33 42 44
Inflation, consumer
prices (annual %)
60 66 70 66 106 88
Unemployment,
total (% of total labor
force)
8 8 9 9 9 8
Population, Total 54,130,268 55,068,880 56,012,109 56,959,988 57,911,273 58,864,649

19. 19
1996 1997 1998 1999 2000 2001
GDP (constant 2000
US$)
234,733,120,142 252,520,406,456 258,349,119,484 249,654,780,792 266,567,531,990 251,379,908,801
GDP (current US$) 181,475,555,283 189,834,649,111 269,287,100,115 249,751,470,869 266,567,531,990 196,005,288,838
GDP growth (annual
%)
7 8 2 -3 7 -6
GDP per capita
growth (annual %)
6 6 1 -5 5 -7
GDP per capita, PPP
(current international
$)
5,797 6,257 8,675 8,258 9,263 8,690
GDP, PPP (current
international $)
346,768,074,993 380,341,945,096 535,617,055,794 517,741,406,393 589,414,041,958 560,919,094,801
Goods exports (BoP,
current US$)
32,067,000,000 32,110,000,000 30,741,000,000 29,031,000,000 30,825,000,000 34,729,000,000
Goods imports (BoP,
current US$)
42,331,000,000 47,158,000,000 44,779,000,000 38,802,000,000 52,882,000,000 38,092,000,000
Imports of goods
and services (% of
GDP)
28 30 20 19 23 23
Imports of goods
and services (annual
% growth)
21 22 2 -4 22 -25
Imports of goods
and services (BoP,
current US$)
48,757,000,000 55,664,000,000 54,637,000,000 47,751,000,000 61,035,000,000 44,190,000,000
Present value of
external debt (current
US$)
.. .. .. .. .. ..
Service exports
(BoP, current US$)
13,083,000,000 19,418,000,000 23,376,000,000 16,451,000,000 19,528,000,000 15,234,000,000
Service imports
(BoP, current US$)
6,426,000,000 8,506,000,000 9,858,000,000 8,949,000,000 8,153,000,000 6,098,000,000
Short-term debt (%
of total external debt)
22 21 22 23 25 14
Short-term debt (%
of total reserves)
97 91 103 96 123 82
Trade (% of GDP) 49 55 42 39 43 51
Inflation, consumer
prices (annual %)
80 86 85 65 55 54
Unemployment,
total (% of total labor
force)
7 7 7 8 7 8
Population, Total 59,821,978 60,783,217 61,742,674 62,692,616 63,627,862 64,544,914

20. 20
2002 2003 2004 2005 2006
GDP (constant
2000 US$)
266,874,563,574 280,926,215,534 307,228,800,117 333,040,988,667 355,999,132,580
GDP (current
US$)
232,534,560,775 303,005,302,818 392,166,274,991 482,979,839,238 530,900,094,505
GDP growth
(annual %)
6 5 9 8 7
GDP per capita
growth (annual %)
5 4 8 7 5
GDP per capita,
PPP (current
international $)
8,741 8,861 10,238 11,465 12,961
GDP, PPP
(current
international $)
572,093,632,799 587,855,258,606 688,340,961,055 781,243,404,330 895,162,804,839
Goods exports
(BoP, current US$)
40,719,000,000 52,394,000,000 68,535,000,000 78,365,000,000 93,613,000,000
Goods imports
(BoP, current US$)
47,109,000,000 65,883,000,000 91,271,000,000 111,445,000,000 134,669,000,000
Imports of goods
and services (% of
GDP)
24 24 26 25 28
Imports of goods
and services
(annual % growth)
21 24 21 12 7
Imports of goods
and services (BoP,
current US$)
53,270,000,000 73,385,000,000 101,434,000,000 123,195,000,000 146,720,000,000
Present value of
external debt
(current US$)
.. .. .. .. ..
Service exports
(BoP, current US$)
14,046,000,000 18,013,000,000 22,960,000,000 26,906,000,000 25,606,000,000
Service imports
(BoP, current US$)
6,161,000,000 7,502,000,000 10,163,000,000 11,750,000,000 12,051,000,000
Short-term debt
(% of total
external debt)
13 16 19 23 21
Short-term debt
(% of total
reserves)
58 65 83 73 67
Trade (% of
GDP)
49 47 50 47 50
Inflation,
consumer prices
(annual %)
45 25 11 10 11
Unemployment,
total (% of total
labor force)
10 11 11 11 10
Population, Total 65,446,165 66,339,433 67,235,927 68,143,186 69,063,538

21. 21
2007 2008 2009 2010 2011
GDP (constant
2000 US$)
372,619,233,720 375,074,194,705 356,973,581,803 389,661,484,658 422,738,755,426
GDP (current
US$)
647,155,131,629 730,337,495,198 614,553,921,823 731,144,392,556 773,091,360,340
GDP growth
(annual %)
5 1 -5 9 8
GDP per capita
growth (annual %)
3 -1 -6 8 7
GDP per capita,
PPP (current
international $)
13,947 15,058 14,454 15,624 17,499
GDP, PPP
(current
international $)
976,166,553,401
1,067,943,794,2
37
1,038,438,711,5
94
1,136,698,730,1
06
1,288,637,792,4
12
Goods exports
(BoP, current US$)
115,361,000,000 140,800,000,000 109,647,000,000 120,902,000,000 143,397,000,000
Goods imports
(BoP, current US$)
162,213,000,000 193,821,000,000 134,497,000,000 177,347,000,000 232,538,000,000
Imports of goods
and services (% of
GDP)
27 28 24 27 29
Imports of goods
and services
(annual % growth)
11 -4 -14 21 -2
Imports of goods
and services (BoP,
current US$)
177,957,000,000 211,809,000,000 151,292,000,000 196,858,000,000 253,630,000,000
Present value of
external debt
(current US$)
.. .. .. 270,204,151,670 ..
Service exports
(BoP, current US$)
29,027,000,000 35,736,000,000 34,111,000,000 35,004,000,000 39,366,000,000
Service imports
(BoP, current US$)
15,744,000,000 17,988,000,000 16,795,000,000 19,511,000,000 21,092,000,000
Short-term debt
(% of total
external debt)
17 19 18 27 ..
Short-term debt
(% of total
reserves)
56 72 66 91 ..
Trade (% of
GDP)
50 52 48 48 50
Inflation,
consumer prices
(annual %)
9 10 6 9 6
Unemployment,
total (% of total
labor force)
10 11 14 12 ..
Population, Total 69,992,754 70,923,730 71,846,212 72,752,325

22. 22
B. Exhibit
B
Source: Central Bank of the Republic of Turkey

23. 23
C. Exhibit
C
Source: International Monetary Fund

24. 24
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